The Air Transport Users Council is today challenging airlines to amend their policies regarding the refund of taxes, fees and charges (TFCs) when passengers voluntarily cancel reservations for non-refundable fares.
Background
There are occasions when passengers, for whatever reason, have to cancel their booking. For those with flexible tickets this is not a problem as they can apply for a refund under the booking conditions of the ticket. But for those who have booked a non-refundable fare this can prove very expensive if they are not covered by insurance.
Passengers appear to generally accept the principle that if they book a non-refundable ticket then they will not get a refund of the main part of the fare from the airline if they have to cancel. But because airlines usually separate out TFCs from the main fare on tickets and confirmation invoices, passengers might assume that TFCs are imposed on airlines by third parties and therefore are not payable by the airline should they not travel. Passengers often therefore claim a refund of the TFCs if they cancel their reservation.
In 2002 many EU airlines signed up to the European Civil Aviation Conference’s Passenger Service Commitment (PSC) (and many of those that didn’t sign up introduced their own similar service commitments). In the UK, most major airlines gave a public undertaking to the Government that they would implement the voluntary codes.
The PSC contains voluntary commitments to deliver a “defined” service standard to passengers. One commitment is for airlines to refund TFCs if passengers cancel reservations for non-refundable tickets. It states that any taxes, fees and charges collected with the fare and shown on the ticket will be refundable where the ticket is not used. This will include non-refundable tickets.
Our findings
We have looked at the refund policies of a number of airlines that operate from the UK. Many airlines do not publish their refunds policies regarding TFCs.
We found that all the airlines we surveyed did not provide refunds (or at least partial refunds) of TFCs automatically – passengers had to ask the airlines for their money back. However, the airline policies did differ significantly. Three airlines, Air France, Alitalia and TAP Air Portugal refund TFCs in full. But such generosity is unusual; the majority of airlines refund TFCs subject to administration fees, which can range from £25 per booking with BMI to £25 per person per sector with Flybe. The table below lists the administration fees charged by those airlines in our survey that either publish them on their website or were willing disclose to us what they are.
Airline
What do they refund?
Administration fee charged
Signed up to Passenger Service Commitment?
Air France
All TFCs
No fee
Yes
Alitalia
All TFCs
No fee
Yes
British Airways
All TFCs
£30 per person
Yes
BMI
All TFCs
£25 per booking
Yes
BMI Baby
Air Passenger Duty only
£20 per booking
Yes (through BMI)
Easyjet
Air Passenger Duty only
“reasonable” service fee
No
Excel Airlines
At least 25% of full fare
Refund of percentage of full fare depending on when cancelled
No
First Choice Airways
All TFCs
Customer service commitment to refund all TFCs
Yes (as Air 2000)
Flybe
“Tax” only
£25 per person per sector
Yes
FlyGlobespan
At least 20% of full fare
Percentage of costs of booking depending on when cancelled
No
Jet2
Air Passenger Duty only
£40 per booking
No
Monarch Airlines
TFCs except fuel and insurance surcharges
£25 per booking (not fuel and insurance surcharges)
Yes
Thomas Cook Airlines
Does not provide refund
Yes (as JMC Airlines)
Ryanair
“Government taxes” only
£15 per booking (refunds “government taxes” only)
No
Tap Air Portugal
All TFCs
No fee for direct bookings (£15 if booked through travel agent)
Yes
Thomsonfly
All TFCs
£25 per booking
Yes (as Britannia Airways)
Virgin Airlines
All TFCs
£30 per person
Yes
We question whether the fees bear any relation to the administrative burden on airlines; they seem designed solely to dissuade passengers from claiming in the first place. Often the administration fee is more than the refund of the TFCs would be. For example, a single passenger flying with Jet2 from Leeds Bradford to Alicante on return trip would end up owing the airline £10.80 if they were to cancel their reservation and seek a refund of TFCs. And even if a passenger is due money back after paying the administration fee, it is often not enough to make it worth their while claiming. However there are occasions when it may well be worthwhile for a passenger to claim a refund. For example, on a British Airways flight from London Heathrow to New York, a single passenger might be able to get around £130 back (based on TFCs of £162.10 and administration fee of £30 per booking).
Conclusion and recommendations
Many airlines have publicly agreed to refund TFCs for non-refundable tickets. However, they appear to be undermining this commitment by charging administration fees that appear to bear no relation to the administrative burden of processing the refunds. In addition, if airlines insist on separating out TFCs on tickets and confirmation invoices then passengers expect to be refunded for this part of the fare should they decide to cancel their ticket. We therefore look to airlines reconsider their use of administration fees when refunding TFCs. We hope that they will either consider scrapping the fees altogether or at least reduce them so they relate more to the actual costs of processing the refund.
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