UK airlines accused of ‘unlawfully’ charging customers £300mn
British airlines could find themselves in court over allegations they have pocketed more than £300 million worth of illegal “hidden charges” levied on customers.
Monarch, Virgin and British Airways, along with Ireland’s Ryanair, are accused of breaking EU laws on contracts and transparency by charging customers “excessive” fees when they seek tax refunds on cancelled or missed flights.
Airlines often charge “administration fees” which are bigger than the tax being reimbursed. They claim the charges cover the cost of processing the refunds.
Cambridge law graduate Michael Green is using his website CaseHub – set up to help “little guys” launch lawsuits against corporations – to host the class action.
More than 5,000 people have so far signed up to the case with claims totalling £315 million (about US$450 million) over the past six years.
Green claims one of Ireland’s leading barristers has been brought in to lead the case.
The lawyers will challenge airlines over their claim that administration fees are necessary after they started running a free, automated refund service for parents who booked flights for young travelers before the government got rid of the duty for under 12s earlier this year.
Jet2 charges £40 for reclaiming air passenger duty (APD) worth just £13 for a short-haul flight, while British Airways makes passengers pay up to £30.
Barristers at law firm 4-5 argue these charges are in contravention of the Consumer Rights Act 2015.
“Just like with the airport VAT scandal, this is an example of the air industry taking advantage of customers' good will,” said Fairer Finance director James Daley.
“Any responsible company would offer automatic refunds for tax that is owed to customers, and charging such prohibitive fees is incredibly bad practice."
British airliners rebuffed the accusations and expressed confidence their side would win.
“Our administration charge is a reflection of the overall costs that are incurred by us in making refunds, including APD which is paid at the time of booking,” a Monarch spokesperson said.
A Virgin Atlantic spokesperson said it doesn’t charge for refunding children’s APD because these cases are related to a change in legislation.
A spokesperson for Ryanair refused to issue a statement on the lawsuit, saying: “We don’t comment on speculation.”