Holidaymakers face six-month wait for travel refunds as airlines struggle to deal with colossal backlog of claims with £7billion owed to customers
- Millions of travellers are owed refunds for cancelled flights amid coronavirus
- Under EU laws, customers should get their money back within seven days
- But airlines are in crisis as they struggle to deal with huge backlogs of claims
- Ryanair boss Michael O’Leary said it will take six months to process refunds
- Here’s how to help people impacted by Covid-19
Millions of travellers owed refunds for cancelled flights face months of chaos amid a crisis in the airline industry.
Carriers and tour operators owe an estimated £7billion to holidaymakers whose trips have been ruined by the pandemic.
Under EU laws, customers should get their money back within seven days.
However, the number of cancelled trips means customers are waiting much longer as airlines struggle to deal with a colossal backlog of claims.
Ryanair boss Michael O’Leary warned it will take up to six months for the airline to process 25million refunds as industry leaders fear crisis-hit airlines will be bankrupted (file image)
The sheer scale of the crisis was underlined yesterday as Ryanair boss Michael O’Leary warned it will take up to six months for the airline to process 25million refunds. Industry leaders fear many crisis-hit airlines will be bankrupted.
To weather the storm, they have been urging passengers to accept vouchers towards a future flight.
However, the Competition and Markets Authority is concerned that many have been pressured into accepting them.
Last night EasyJet founder Sir Stelios Haji-Ioannou warned that customers who accept vouchers could end up losing their money.
Documents seen by the Daily Mail suggest EasyJet has saved at least £700million, partly by encouraging passengers to choose vouchers.
But Sir Stelios warned that the vouchers, which have little consumer protection, could be ‘worthless’ by the end of the year due to the uncertainty facing the industry.
EasyJet founder Sir Stelios Haji-Ioannou warned that customers who accept vouchers could end up losing their money as they have little customer protection (file image)
The tycoon, whose family is EasyJet’s largest shareholder, is calling on the company to cancel a £4.5billion contract for 107 new Airbus planes.
He said: ‘If you are a voucher holder hoping to use the voucher to fly on EasyJet in 2021, you must call on EasyJet to cancel the Airbus order.’
EasyJet said customers ‘can be absolutely confident to accept vouchers’.
It follows complaints from consumer groups and MPs, who have accused airlines of using underhand tactics to avoid paying out.
Yesterday the Civil Aviation Authority warned airlines not to ‘systematically deny’ refund rights and to pay out ‘as soon as practically possible’.
Ryanair boss Mr O’Leary warned it will take ‘many months’ to process 25million refunds for cancelled flights.
This came after reports that the Government turned to Morgan Stanley for advice on how to keep airlines in business. Pictured is Heathrow Airport deserted amid Covid-19 pandemic
He told Radio 4’s Today programme: ‘We’re working through the March refunds, that will certainly take us two or three months, then we move to the April refunds, then the May refunds.
‘The May cancellations will take us four to six months at the moment to process.’ Customers with British Airways – which will no longer serve alcohol on flights to reduce interaction between passengers and crew – say they have been getting refunds relatively quickly.
However, they are being asked to call a customer service line which often plays an automated message before hanging up.
EasyJet is promising refunds within 28 days, but admits this could take longer.
Virgin Atlantic is automatically offering vouchers, but customers have to contact the airline if they want a refund paid within 90 days.
It came as reports emerged that the Government has turned to Morgan Stanley for advice on how to keep airlines in business.
The Wall Street bank was initially drafted in to handle a possible bailout of Virgin Atlantic, but has been awarded a broader mandate covering the entire sector.
Ryanair vows to refund 25million customers in six months: Michael O'Leary insists he will take 50% paycut from £3m salary as he slashes 3,000 jobs - while Heathrow sees 97% drop in passengers in last month
By Amie Gordon
Ryanair boss Michael O'Leary has today cut up to 3,000 jobs but vowed to refund 25 million out-of-pocket customers - as Heathrow sees a 97 per cent drop in travellers in the last month.
The airline said a stringent restructuring programme will begin in July, with some 3,000 pilot and cabin jobs under threat.
Speaking on BBC Radio 4 this morning, under-fire Ryanair Chief executive Michael O'Leary said his stricken airline was facing a backlog of 25 million customer refunds.
O'Leary, whose £3million salary was slashed by 50 per cent for April and May, has agreed to extend the pay cut for the remainder of the financial year, to March 2021.
The CEO, who is worth an estimated £3.8 billion, vowed to give all passengers their money back, but warned it could take 'many months'.
The budget airline added that flights will remain grounded until 'at least July' and passenger numbers will not return to 2019 levels 'until summer 2022 at the earliest'.
Unpaid leave and pay could also be slashed by up to 20 per cent, as well as the closure of aircraft bases across Europe.
The airline industry is facing dire financial problems after passenger numbers plummeted due to travel restrictions imposed amid the ongoing pandemic.
The number of passengers travelling through Heathrow last month was down by around 97% compared with April 2019, the airport has announced.
The company also said it would operate less than 1 per cent of its scheduled flights to the end of June. Despite most flights being grounded the budget airline are still operating limited services out of Dublin, London, Manchester, Bristol, Cork and Glasgow.
This is part of a wider agreement with European governments to keep flight links open for emergency reasons.
Ryanair's fleet has been grounded since March and will remain so until 'at least July', confirmed CEO Michael O'Leary today
The airline announced the planned job cuts as it revealed it expects to operate under 1% of its schedule between April and June. Pictured, A Ryanair departures board in terminal one at Dublin airport today
Heathrow recorded an 18.3% year-on-year decline in demand to 14.6 million passengers between January and March, while earnings before tax and interest fell by 22.4% to £315 million.
It comes as the airport's chief executive John Holland-Kaye warned that introducing social distancing at airports is 'physically impossible'.
He said a 'better solution' is needed to make air travel safe as he called for the UK to lead the way in developing a common international standard of measures which could include temperature checks for all passengers.
Yesterday it was revealed British Airways plans to cut the jobs of a quarter of its pilots, could abandon Gatwick Airport and cut the remaining flights at Heathrow.
Mr O'Leary told Radio 4 he was forced to compete 'with other airlines who are getting unfair help from other governments.'
He added: 'We are reducing staffing by about 15%, mostly pilots and cabin crew – that's the minimum we think we need to survive the next 12 months and the remaining pilots, cabin crew and members of our team will face pay cuts of up to 20%.
'The challenge for us is that while we believe well be back flying in July, most of the summer season has gone. We'll be flying at very low fares because we'll be competing with large airlines like Lufthansa, Air France and Alitalia who have either been nationalised or received 10 and 12 billions of state aid and will be able to engage in low cost selling for the next three-five years.
'The UK government has already said it won't be providing state aid. The challenge we face is in the continent of Europe where the French, Air France, Lufthansa who are subsidy junkies, are running around Europe hoovering up state aid on top of payroll support schemes.
'We support transparent non-discriminatory supports like the payroll support scheme.
'We ask the question though, why does Lufthansa need 12billion on top of that payroll support scheme when they're not even flying at the moment?'
He said Ryanair has been grounded for three months from April, May and June, and will carry less than 150,000 passengers over those three months when it expected to carry more than 40million.
He added: 'For the next three-five years we'll be facing unfair competition competing with legacy airlines in Europe who are receiving massive government help when we won't receive any.'
| Company | Subsidy |
|---|---|
| Lufthansa Group | €12.4 billion plus |
| AF-KLM Group | €10.1 billion plus |
| TUI Group | € 1.8 billion plus |
| Alitalia | € 1.7 billion plus |
| SAS | € 0.8 billion plus |
| Finnair | € 0.7 billion plus |
| Norwegian | € 0.3 billion plus |
CEO Michael O'Leary has agreed to extend this 50% pay cut for the remainder of the financial year to March 2021
He also hit back when asked about customers feeling 'cheated' because they are receiving vouchers instead of cash refunds.
He said: 'We will give you your money back, if you want a cash refund, you will receive one. In a normal month we will process 10,000 cash refunds but currently we're facing a backlog of 25million refunds. Which are not Ryanair's fault, it was caused by the government grounding Ryanair's fleet.
'Our staffing is reduced to 25% of normal levels because of social distancing.
'It will take us many months to process these refunds, but nobody will not get a cash refund.'
Ryanair said in a statement this morning: 'As a direct result of the unprecedented Covid-19 crisis, the grounding of all flights from mid-March until at least July, and the distorted state aid landscape in Europe, Ryanair now expects the recovery of passenger demand and pricing (to 2019 levels) will take at least two years, until summer 2022 at the earliest.
'The Ryanair Airlines will shortly notify their trade unions about its restructuring and job loss programme, which will commence from July 2020.'
Mr O'Leary, worked as a financial adviser to the founder of the airline, Tony Ryan, before joining in 1988 as deputy chief executive. He became CEO in 1994 and has courted controversy with some of his views.
He once said: 'The best thing you can do with environmentalists is shoot them.'
Mr O'Leary also believes travel agents deserve the same treatment, saying once: 'Screw the travel agents.
'Take the f***ers out and shoot them. What have they done for passengers over the years?'
Coronavirus information at a Ryanair check in desk in terminal one at Dublin Airport
British Airways planes seen parked up on March 31 at Gatwick airport
He famously proposed coin-operated toilets on flights and dressed up as the pope to launch Ryanair's new route from Dublin to Rome.
He once addressed Ryanair customers asking for their money back with: 'You're not getting a refund so f**k off. We don't want to hear your sob stories. What part of 'no refund' don't you understand?'
He married Anita Farrell in September 2003, and they have four children
This comes as British Airways plans to cut the jobs of a quarter of its pilots and could abandon Gatwick Airport altogether in a bid for post-coronavirus survival.
The news was revealed yesterday in a memo, written by the head of BA's Gatwick operation and seen by BBC News.
On Tuesday, owners IAG announced some 12,000 redundancies - after it furloughed more than half of its 45,000 workers.
Under the plan, BA would cut 1,130 captain and co-pilot jobs from its headcount of 4,346, the IAG-owned airline's head of flight operations told the BALPA union in the letter.
The letter, written on April 28, reads: 'In a short space of time the situation has significantly deteriorated.'
It adds that BA may yet be forced to suspend the few services still running from London Heathrow.
'There are no clear signs of improvement in air passenger demand,' it adds. Passenger numbers are expected to halve compared to 2019, with the likes of Flybe already going into administration before full lockdown measures were in place in Britain.
Early last month, Easyjet announced it was considering plans to keep middle seats empty on its planes when it restarts flights
In a letter written on April 28, British Airways CEO Alex Cruz said the airline was 'preparing for a new future'.
He wrote: 'Yesterday, British Airways flew just a handful of aircraft out of Heathrow. On a normal day we would fly more than 300.
'What we are facing as an airline, like so many other businesses up and down the country, is that there is no 'normal' any longer.'
His letter continued: 'There is no Government bailout standing by for BA and we cannot expect the taxpayer to offset salaries indefinitely.
How airlines bend the rules
British Airways: The refund option has been removed from its website but the option to claim a voucher remains. The customer service line is frequently engaged or puts callers on hold for hours.
Customers are being encouraged to apply for a voucher equal to the value of their flight but must pay more if it ends up being more expensive.
BA says customers should call to rebook, refund or choose a voucher. Refunds can be requested up to 12 months after the original departure date.
EasyJet: The refund option was taken off the website, but reinstated after customer complaints.
The airline is trying to refund customers within 28 days, but admits it could take longer. A spokesman says: 'We assure customers these entitlements will be available long after their cancelled flight was due to fly.'
Ryanair: Offered full reimbursement within 30 working days, then did a U-turn and is 'highly recommending' customers apply for a voucher instead. Says customers will be able to exchange vouchers for cash after a year.
A spokesman says: 'Customers who choose a voucher but don't redeem it within 12 months may still apply for and obtain a refund.
Customers who choose not to accept a free move or voucher will be refunded in due course, once this crisis is over.'
Virgin Atlantic: Credit notes are being issued but can be rejected in favour of a full refund, with claims processed within 90 days.
A spokesman says: 'The credit [equal to the value of the cancelled flight] can be used to rebook on alternative dates, allowing for a destination and name change, for travel until May 31, 2022.
If the rebooked date is before November 30, 2020, we'll waive any fare difference.' Refunds will take longer than normal.
Tui: Customers can choose a refund or credit note but can only apply for their money back once their refund credit has been received — up to four weeks after the departure date.
A spokesman says requested refunds will take about four weeks.
Jet2 is offering cash refunds but with delays because of an 'unprecedented' number of calls.
'Any money we borrow now will only be short-term and will not address the longer-term challenges we will face.'
BALPA General Secretary Brian Strutton said: 'There has been no warning or consultation by Ryanair about the 3000 potential job losses and this is miserable news for pilots and staff who have taken pay cuts under the Government job retention scheme.
'Ryanair seems to have done a u-turn on its ability to weather the COVID storm.
'Aviation workers are now facing a tsunami of job losses. The U.K. Government has to stop daydreaming and keep to the promise made by the Chancellor on 17 March to help airlines or this industry, vital to the U.K. economy, will be devastated.'
Early last month, Easyjet announced it was considering plans to keep middle seats empty on its planes when it restarts flights.
Chief executive Johan Lundgren said it was one of the options being considered to keep social distancing measures in place once travel restrictions are lifted.
Easyjet's Mr Lundgren said: 'Our assumption is that load factors will not be back to normal early on, which means that we will have the opportunity for a middle-seat option but I'm talking about this as an initial phase and nobody knows for how long that phase will be.'
He added: 'We're also looking at various disinfection programmes on the aircraft.'
Easyjet's entire fleet of planes has been grounded since 30 March and the majority of its 9,000-strong UK-based workforce have been furloughed until the end of May. A small number of staff remain working in 'central functions.'
Michael O'Leary, the boss of rival airline Ryanair, has always slammed the idea of keeping middle seats free on his fleet once flights resume, branding the idea 'hopelessly ineffective.'
While Whizz Hungarian low-cost airline Wizz Air said it will be resuming flights from London Luton today.
The flights will service airports in Spain, Portugal, Israel, Slovakia, Serbia, Romania and Hungary.
The airline is promising low fares to stimulate demand, however, the Foreign and Commonwealth Office still advises against all foreign non-essential travel.
Passengers won't be able to get refunds if they wish to cancel their flight, even if they know they won't be let into the country they are flying to.
Meanwhile German airline Lufthansa has become the first European airline to introduce compulsory facemasks for passengers.
The measures will be put in place later this week and passengers will be required to bring their own facemask with them.
It comes after three of the largest four U.S. airlines said Thursday they will require passengers to wear facial coverings on U.S. flights, joining JetBlue Airways Corp in taking the step to address the spread of the coronavirus and convince reluctant passengers to resume flying.
United Airlines, Delta Air Lines Inc and American Airlines Group Inc, along with the smaller Frontier Airlines, which is owned by private equity firm Indigo Partners LLC, announced they will require facial coverings next month.
Delta and United's new rules start May 4, while Frontier's start May 8 and American's requirements begin May 11. The policies exempt young children from wearing masks or other facial coverings.
Many U.S. airlines are also requiring pilots and flight attendants to use facial coverings while on board aircraft.
Delta said the airline will require face coverings 'starting in the check-in lobby' and at 'Delta Sky Clubs, boarding gate areas, jet bridges and on board the aircraft for the duration of the flight â except during meal service.'
Delta added their use 'is also strongly encouraged in high-traffic areas, including security lines and restrooms. People unable to keep a face covering in place, including children, are exempt.'
The high-rolling £3bn lifestyle of race horse-loving Ryanair boss Michael O'Leary behind budget airline famed for its no-frills service
Michael O'Leary, the outspoken boss of low-cost airline Ryanair, has been no stranger to controversy over the years and has an estimated fortune of £860million.
He was born on March 20, 1961, and was educated at Clongowes Wood College, in Country Kildare, before studying business and economics at Trinity College, in Dublin.
Mr O'Leary trained as a tax accountant before working as a financial adviser to the founder of the airline, Tony Ryan, before joining in 1988 as deputy chief executive.
Mr O'Leary married Anita Farrell in September 2003 (pictured) and the couple have four children
He became CEO in 1994 and has courted controversy with some of his views.
Mr O'Leary once said: 'The best thing you can do with environmentalists is shoot them.'
Mr O'Leary also believes travel agents deserve the same treatment, saying once: 'Screw the travel agents.
'Take the f***ers out and shoot them. What have they done for passengers over the years?'
He famously proposed coin-operated toilets on flights and dressed up as the pope to launch Ryanair's new route from Dublin to Rome.
He once addressed Ryanair customers asking for their money back with: 'You're not getting a refund so f**k off. We don't want to hear your sob stories. What part of 'no refund' don't you understand?'
In his personal life he married Anita Farrell in September 2003, and the couple have four children.
They live in a Georgian mansion in Gigginstown House, near Delvin in County Westmeath.
The property is set in 100 acres of lush countryside and it was where Mr O'Leary married his wife, before whisking her off to their honeymoon in Mauritius.
He also owns a home in Dublin worth £16.5million and a £9million holiday home in Majorca.
Unlike many other wealthy individuals he is not known for spending money on life's luxuries such as fast cars or superyachts, but does have a love of horse-racing and is a seven-time champion owner.
Last year he made the announcement that he is to start winding down his Gigginstown Stud racing operation in Ireland.
O'Leary said: 'We wish to sincerely thank all our trainers and their teams for the enormous success we've enjoyed over the past decade, but as my children are growing into teenagers I am spending more and more of my time at their activities and I have less and less time for National Hunt racing, a situation that will continue for the foreseeable future.
'I hope that by running down our string over an extended four- or five-year period it will give our trainers ample time to replace our horses without disruption.'
Low cost airline Wizz Air will resume flights from Luton airport to Spain, Portugal and other destinations TODAY - even though some are to countries that won't let foreigners in
By Darren Boyle for MailOnline
Hungarian low-cost airline Wizz Air said it will be resuming flights from London Luton today.
The flights will service airports in Spain, Portugal, Israel, Slovakia, Serbia, Romania and Hungary.
The airline is promising low fares to stimulate demand, however, the Foreign and Commonwealth Office still advises against all foreign non-essential travel.
Passengers won't be able to get refunds if they wish to cancel their flight, even if they know they won't be let into the country they are flying to.
Hungarian low-cost carrier Wizz Air said it will resume flights from London Luton airport this morning after implementing new Covid-19 guidelines for staff and passengers
The airline's chief executive Jozsef Varadi, pictured, said he hoped to have 70 per cent of services back between July and August
The airline is planning to resume services to locations such as Tenerife, Lisbon, Slovakia, Serbia, Bulgaria, Hungary, Romania and Israel
According to research produced by Bank of America, Wizz Air is currently sitting on massive cash reserves and could refund all passengers three times over.
Passengers on the resumed services will also be obliged to wear face masks and in-flight magazines will not be available.
Wizz Air's UK managing director Owain Jones said: 'As we restart selected Luton flights to provide an essential service to passengers who need to travel, our primary concern is the health, safety and well-being of our customers and crew.
'The protective measures that we are implementing will ensure the most sanitary conditions possible.
'We encourage our customers to watch our new video on how to stay safe when travelling, as well as for more details on our new health and safety measures.'
The airline is also preparing to resume flights to Italy - including the Covid-19 hotspot of Milan,
According to the company's chief executive Jozsef Varadi, the airline will run 10 per cent of its services during May and hopes to have 70 per cent of its jets in the air by August.
Mr Varadi told the Financial Times: 'While today looks like a huge concern, a life changing moment, in a year or two nobody remembers.'
He said: 'Whatever crisis we look back on in history, one conclusion you can certainly make is peoples' memories tend to be very short. While today looks like a huge concern, a life changing moment, in a year or two nobody remembers.'
A spokesperson for London Luton Airport told MailOnline: 'The safety of our passengers and staff is our number one priority and we continue to rigorously implement all Government guidance.
'This includes deep cleaning, the installation of sanitiser across the airport and floor markings to remind customers to maintain a safe distance, as well as segregating staff shift patterns where practical.
'Air links for both passengers and freight have been recognised as a key service and the Government has asked airports to remain open where possible, to ensure these services are not interrupted.
'The decision to operate individual flights is a matter for each airline and any passengers using these services will need to adhere to all restrictions imposed both in the UK and in the country of travel.'
However customers who have booked flights and holidays with various airlines are finding it incredibly difficult to secure cash refunds.
Tui, the UK's biggest tour operator, has extended the suspension of its holidays for the next six weeks.
The company said all trips would be cancelled up to and including June 11, and warned customers wanting cash refunds that its call centres are 'incredibly busy'.
It had previously suspended its operations up to May 14.
Tui also cancelled its Marella Cruises sailings up to the end of June, and postponed the launch of its river cruises until late November.
A total of nearly 900,000 people have had their holidays cancelled, a spokeswoman said.
The firm told affected customers that they will receive a refund credit for the full value of their holiday.
This can be used to book another trip taking place before the end of October 2021.
Package holiday customers will receive an additional credit worth up to 20 per cent of their booking.
Tui said customers who are 'unable to accept' a refund credit can apply for a cash refund, but warned that its call centre staff are 'incredibly busy' so waiting times are 'considerably longer than usual'.
Simon Cooper, founder and chief executive of rival travel agency On The Beach, told the PA news agency last week that failing to pay cash refunds is 'a bad idea for everyone concerned' as struggling companies will be forced to 'massively increase' their prices for next year's holidays to avoid bankruptcy.
UK laws state that full refunds should be given within 14 days for cancelled package holidays.
Consumer group Which? found that none of the UK's 10 biggest holiday companies or 10 most popular airlines are offering full refunds within the legal timeframe, and some are refusing to provide refunds altogether.
Many travel firms are suffering huge financial losses due to the collapse in demand caused by the coronavirus pandemic.
The Foreign and Commonwealth Office has advised against all but essential international travel since March 17.
Rory Boland, editor of magazine Which? Travel, said Tui 'must ensure it is making the refund process as straightforward as possible'.
He added: 'The travel industry is under unprecedented strain, and the lack of action from the Government on measures to support operators to process refunds is unacceptable.'
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2020-05-02 05:10:30Z
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