The UK competition authority is investigating British Airways and Ryanair for failing to give refunds for flights that customers could not legally take because of coronavirus restrictions.
While the UK was under lockdown it was unlawful for people to travel for non-essential reasons.
The Competition and Markets Authority (CMA) said that during these periods the two airlines refused to give refunds and instead offered vouchers or the option to rebook.
By failing to offer people their money back, both firms may have breached consumer law and left people unfairly out of pocket, the regulator said.
The CMA’s investigation only concerns flights that were not cancelled.
“While we understand that airlines have had a tough time during the pandemic, people should not be left unfairly out of pocket for following the law,” said CMA chief executive Andrea Coscelli.
“Customers booked these flights in good faith and were legally unable to take them due to circumstances entirely outside of their control. We believe these people should have been offered their money back.”
British Airways said it had acted lawfully, while Ryanair said it had refunded a small number of people after looking into their specific cases.
Budget airline Ryanair has reported a record after-tax loss of €815m (£703m) for the financial year to the end of March 2021 after the Covid-19 pandemic curtailed domestic and international travel.
Revenues declined by 81% to €1.64bn, in line with the drop in traffic which fell to just 27.5 million passengers from 148.6 million in the previous year.
But group CEO Michael O’Leary said the airline is seeing growing demand, suggesting that “recovery has already begun”.
Bookings have reached 1.5 million a week, from 500,000 a week in early April.
“The rate of bookings suggests there is a huge amount of confidence,” O’Leary told the BBC. “We are very optimistic for the next couple of months.”
He also said that, with most European populations likely to be vaccinated by September, the airline is anticipating a particularly strong recovery in October to March, the second half of its financial year.
Overall, passenger numbers for the current financial year are now expected to be towards the lower end of the previously forecast range of 80 to 120 million passengers.
The airline said it was “impossible to provide meaningful FY22 guidance at this time” but it is hoping to break even.
Irish airline Ryanair Holdings Plc (LON:RYA) said today it will unconditionally sell its entire 29% interest in smaller rival Aer Lingus Group Plc (LON:AERL) to any other European Union (EU) carrier that makes a bid and secures acceptances from 50.1% of the target’s stockholders.
The announcement was made after the UK’s Competition Commission (CC) said in late May that Ryanair may have to reduce or shed its entire stake in Aer Lingus as it could threaten competition on certain routes.
Ryanair, which has itself failed to take full control of Aer Lingus three times already, noted that this remedy eliminates the company’s ability to block any future acquisition of the business by another EU airline.
The CC is expected to finalise an investigation into Ryanair’s stake by 5 September.
UK regional airline company Flybe Group Plc (LON:FLYB) said it is disappointed by the news that the European Commission (EC) will most certainly block Irish low-cost carrier Ryanair Holdings Plc’s (LON:RYA) planned buyout of Aer Lingus Group Plc (LON:AERL).
EC’s expected decision would not only prevent Ryanair from securing the 70% it does not already own in its smaller rival, but also hinder Flybe’s deal to acquire 43 Aer Lingus UK and European routes plus some aircraft for EUR1m (USD1.3m).
This latest agreement is part of Ryanair’s “unprecedented” remedies package in connection with the Aer Lingus bid. The company had also agreed to sell all of its and Aer Lingus’ London-Gatwick operations to International Airlines Group (LON:IAG).
Yesterday, Ryanair announced it was notified by the EC of its intention to ban the buyout despite the offered concessions. The company also noted it would appeal any prohibition decision to the European Courts. In its own statement, Flybe said it would wait to see the outcome of that process.
Ryanair is offering a price of EUR1.30 (USD1.75) per share to buy the remaining shares in Aer Lingus, thus valuing the company at EUR694m.
UK regional airline company Flybe Group Plc (LON:FLYB) said it had signed a deal under which it would acquire several aircraft and operating routes from Irish peer Ryanair Holdings Plc (LON:RYA), if the latter manages to successfully take over its rival Aer Lingus Group Plc (LON:AERL).
The planned transaction is part of a package of concessions sent to the European Commission (EC) by Ryanair in an attempt to finally obtain the regulator’s nod for its Aer Lingus buyout.
As part of the deal, Ryanair would form a new company, to be known as Flybe Ireland, and transfer to it a total of 43 European routes along with requisite number of slots and licences to operate them. In addition, the Irish company would contribute at least nine Airbus A320 aircraft and inject EUR100m (USD135.3m) in cash. In turn, Flybe will acquire the new company for EUR1m.
The move will only be carried out in the event that the EC clears Ryanair’s bid for Aer Lingus by 6 March 2013 and the transaction is completed in May. On the other hand, the Flybe Ireland deal is seen to close in October, after its potential buyer conducts due diligence and posts a circular to its own stockholders for approval. Flybe noted it has already received irrevocable acceptances representing 64% of the shareholders.
Yesterday, however, Aer Lingus’s CEO Christoph Mueller told journalists he expects the EC to once again block Ryanair’s takeover offer despite the proposed remedies. According to him, it is doubtful whether Flybe would be an independent competitor to Ryanair after such a move.
So far, European Union (EU) regulators had banned twice Ryanair’s effords to buy the 70% stake it does not already have in Aer Lingus. The latest offer of EUR1.30 per share values the target at EUR694m.