Memorandum submitted by the Air Transport
Users Council (PEAT 05)
INTRODUCTION
1. There have been significant changes in
recent decades in the regulatory and commercial environments within
which the air transport industry operates. Consumer interests
have been included, to some degree or other, in the rationale
for all of the changes. Some of the changes (such as the creation
of the single European market in air transport) have been of a
high level political and economic nature, where there has been
an expectation that consumers would share the benefits. Others
(such as Regulation EC 261/2004 on denied boarding, cancellation
and delay) have been more directly aimed at protecting consumer
interests. This Inquiry by the Transport Select Committee is a
timely opportunity to consider the impact of these changes on
passengers' experience of air travel.
BACKGROUND
2. The Inquiry terms of reference refer
to a more than 100-fold increase in passengers passing through
UK airports since 1950, and a projected possible further doubling
by 2020. This increase has taken place against a breaking down
of the old order of restrictive bilateral air services agreements
and of the quasi-regulatory role of the International Air Transport
Association (IATA). For UK air passengers, perhaps the most significant
changes have flowed from the liberalisation of the EU air transport
market. These changes have included significantly lower airfares
(in real terms) and a dramatic increase in opportunities to be
able to fly from regional airports.
3. This sweeping away of restrictive regulation
of airlines' access to markets and of their ability to devise
service and pricing strategies according to their commercial judgement
has been accompanied—perhaps, at first sight, perversely—by
new measures (including regulations) aimed at protecting passenger
interest. New legislation has included:
— Montreal Convention 2001.
— Regulation EC889/2002 on air carrier
liability.
— Regulation EC261/2004 on compensation
and assistance in the event of denied boarding, cancellation and
long delays.
— Regulation EC2111/2005 on air carrier
identity.
— Regulation EC1107/2006 on rights
of disabled persons and persons of reduced mobility when travelling
by air.
4. In 2001, as a precursor to the latter
instruments on the above list, airlines and airports entered into
Voluntary Passenger Service Commitments following discussions
with the European Commission and the European Civil Aviation Conference
(ECAC).
5. The AUC contributed to discussions leading
up to the adoption of all of these international measures. In
addition, the AUC has taken forward initiatives in the UK its
own right, with a view to promoting improvements in passengers'
experience of air travel. These have included:
— Complaint to the Office of Fair Trading,
citing the Unfair Terms in Consumer Contracts Regulations, about
IATA Recommended Practice on General Conditions of Carriage (resulting
in revised Recommended Practice).
— Complaint to Advertising Standards
Authority (resulting in requirement for airlines' print advertisements
to quote fully-inclusive prices).
— Inclusive website pricing initiative
(a continuing AUC campaign).
— Complaint to the Office of Fair Trading
about arbitrary use Limited Release Tags for checked-in baggage
(resulting in OFT decision in AUC favour).
— Charter Airline Delay League Table
(published annually since 1997).
6. The AUC's comments on issues listed in
the Inquiry Terms of Reference are set out below.
TICKETS
On-line bookings
7. On-line shopping has become a feature
of modern life across all sectors. For putative air passengers,
the Internet has made it much easier both to find out about what
is available and to make a purchase. For airlines, it has facilitated
the development of dynamic pricing (a practice also adopted in
other sectors) by enabling them to communicate live information
on prices and availability.
8. The Internet has also made it much easier
far airlines to communicate information to passengers about conditions
attached to fares, and about general conditions of carriage (that
is, contract terms that are not specific to individual fare-types).
In general terms, this has to be in both parties' interests, and
is a greatly improved situation since pre-Internet times.
9. However, the use of websites as the primary
means of communication with passengers enables airlines to change
their terms and conditions very easily. This means that passengers
have to be on their guard against changes made after they have
booked and paid for their flights. The view of the AUC is that
this is an issue where any remedial action should be taken on
a case-by-case basis, if appropriate citing generic consumer protection
legislation.
10. The AUC has, however, identified the
way that airfares are presented on websites as an issue that needs
to be addressed generically. The issue that initially attracted
the AUC's attention was that most airlines offered a price at
the first stage of the booking process that was less than the
total price after the subsequent addition of "taxes, fees
and charges". One of the AUC's concerns about this practice
was that it was misleading, and that passengers might be enticed
into paying more for their flights than they had intended.
11. However, legal advice was that the practice
would not be construed as misleading (in a legal sense) if the
total price was clear to the passenger before they committed themselves
to the purchase (which was uniformly the case). And responses
to the AUC's market research on this issue, together with informal
"straw polling", indicated that passengers were generally
comfortable with the concept of net pricing, subject to the addition
of "taxes". The AUC therefore did not pursue this, other
than to try to publicise the issue and encourage passengers to
shop around.
12. The AUC was far more concerned, however,
about the arbitrary nature of some of the charges. The inference
in airlines presenting fares in this way is that the "taxes,
fees and charges" are levied by a third party: a passenger
will thus have to pay them whichever airline they choose to use.
That is indeed the case for government taxes, such as the UK's
Air Passenger Duty. But other fees and charges listed by airlines
(such as fuel or airport service charges) are components of an
airline's costs. A passenger has no way of knowing whether the
amount added to their fare is a true reflection of the actual
cost to the airline.
13. The AUC is particularly concerned about
the underlying inference that the charges will be common to any
carrier operating between the same two airports. The AUC's research
demonstrated that this was not the case; indeed it revealed that
the additional charges could vary by as much as a factor of four
(between £10 and £40 in the case of services between
Gatwick and Amsterdam at the time of the research).
14. The AUC therefore continues to believe
that the only way to prevent passengers being enticed into a transaction
that will end up costing them more than they wished to pay, or
being misled when comparing prices between airlines, is for airlines
to be required to list total fares in all advertising and at the
first stage of a website booking process. The AUC has been supported
by other bodies in this, most notably by West Sussex Trading Standards
Authority. And it is encouraged by current discussion on this
point in the context of a European Commission proposal for review
of the "third package" legislation that completed the
liberalisation of the internal market in air transport.
Telephone bookings
15. The AUC's enthusiasm for the benefits
that air passengers have derived from airlines' use of the Internet
is tempered by charges that are levied on passengers making reservations
by telephone. The AUC is prepared to accept that an airline should
be free to levy these charges if it wishes, provided it tells
passengers about the charges—and about how to avoid them
(for example, by booking on line).
TRAVEL TO
AIRPORTS
16. The AUC supports all efforts to improve
public transport connections to UK airports, and has responded
to this effect to government consultation papers—most recently
in the context of the 2003 air transport White Paper. Further
investment in surface access links to airports, properly integrated
with other public transport networks, will become increasingly
important not only in terms of convenience for passengers, but
also in terms of facilitating continued environmentally. sustainable
growth in air transport.
AIRPORTS: ACCESSIBILITY
FOR ELDERLY
AND DISABLED
PEOPLE, QUALITY
OF CHECK-IN
PROCEDURES, AIRPORT
FACILITIES, SECURITY
Accessibility for elderly and disabled people
17. The airport experience is self-evidently
an integral element of the air transport product. Accessibility
for elderly and disabled people is an important issue, and one
where the industry and regulatory bodies have worked closely together
for many years. In the UK, this work is taken forward by the Disabled
Persons Transport Advisory Committee (to which the AUC contributes
through its membership of the Committee's Aviation Working Group).
And, at the EU level, Regulation EC 110712006 will apply in two
stages, starting in, July this year.
18. In practice, the AUC receives very few
complaints from elderly or disabled passengers about problems
of accessibility. Therefore, whilst being part of the consensus
that this will remain an important issue in principle, and one
that requires continuing vigilance, the AUC's view is that the
air transport industry has a good track record in taking care
of its passengers with special needs.
Check-in
19. The quality of the check-in experience
is a function of many factors. One of these is the cost-structure
of the airline, such that check-in convenience (or not) is part
of the package to which a passenger subscribes when choosing their
airline. In general, however, check-in is one area where all airlines
have sought to reduce costs, with a result that the industry has
developed technologies such as common user terminal equipment
(CUTE), self-service check-in kiosks and on-line check-in.
20. All of these developments have, in general,
improved the check-in experience for passengers, in terms of convenience
and reducing queuing times. However, the AUC has recently had
informal conversations with a number of airlines where there have
been inconsistencies between expectation and reality. And it has
some concerns about how some airlines appear to be managing what
is a significant change in culture for many passengers.
Airport facilities
21. Availability and quality of services
for passengers at airports are important elements of the overall
air passenger experience. The inclusion of Service Quality and
Rebate provisions in the Civil Aviation Authority's regulation
of airport charges has been a welcome step towards taking account
of passenger interests.
Security
22. Policy on security screening procedures
is a matter for government. The key issues that have arisen in
recent years, from a passenger perspective, have been communication
of changes that impact directly on passengers (such as changes
to what they can—or, more importantly, cannot—carry
in their hand luggage) and the impact of changes on queue times.
23. On the issue of security queues, the
point is of course in part that people prefer not to spend time
in queues. But a more important concern is when passengers miss
their flights because they have been held up in security. The
AUC does not believe that this is a common problem, though it
does happen. Airports and airlines must work together to ensure
that screening capacity meets reasonably foreseeable fluctuations
in passenger throughput. And check-in deadlines must reasonably
reflect the time that passengers will need to clear security and
get to the departure gate before their flight closes.
BAGGAGE
24. Baggage rules and charges are two areas
where the old certainties have recently started to break down
(that is, where airlines are increasingly moving away from previous
industry-wide standards). The AUC's view is that these are elements
of an airline's service, and that airlines should be free to vary
them to differentiate; their product from those of their competitors.
But airlines must ensure that passengers are made aware of any
charges, and of baggage allowances, during the booking process.
25. Mishandled baggage remains an area of
concern for the AUC. The Montreal Convention increased airlines'
liability for passengers' baggage compared with the previous Warsaw
Convention (which it has superseded in most countries). And the
industry has invested (and continues to invest) in technology
to locate missing bags. But compensation for lost luggage under
the Montreal Convention rarely covers the full value of the contents,
and bags still go missing irretrievably.
26. Such statistics on mishandled baggage
as are publicly available indicate that millions of passengers
are affected by this problem each year. The AUC believes that
the answer does not lie solely in concentrating on procedures
for dealing with what has already gone wrong. Airlines and airports
must together make greater efforts to prevent baggage being mishandled
in the first place.
AIRCRAFT
On-board product
27. The on-board product (seating, in-flight
service etc) has become a key element in competition between carriers.
But it is only one component of the product package, and is very
much related to an airline's overall pricing strategy and where
the airline has positioned itself in the market. In practice,
different passengers on the same aircraft will be getting very
different perceptions of value for money depending on what they
actually paid and on their individual expectations. A passenger
travelling on a no-frills carrier may have paid more for a lower
level of service than they might have been able to enjoy at a
lower price on a full-service airline. But this is the market
at work.
Disruptive passengers
28. The AUC is not aware that there is a
systemic problem with disruptive passengers, and believes that
incidents should be dealt with on case-by-case basis.
Airlines routinely provide training for cabin
and flight crew on dealing with disruptive passengers. The 1996
and 1999 changes in UK law to facilitate the arrest of disruptive
passengers were to be welcomed. They enabled airlines to follow
up serious incidents, and the courts to hand down exemplary sanctions
on offenders.
29. The AUC receives only a very small number
of passenger complaints that it categorises under "disruptive
passengers", and is aware that for these complaints, as in
all others; there are two sides to the story. In general, the
AUC's perception is that airlines handle these incidents in an
appropriate manner, though it is concerned that some incidents
seem to reflect a possible over-reaction on the part of airline
staff. The AUC hopes that a culture is not developing that would
see passengers who make a legitimate complaint—to cabin
crew for example—being considered, by definition, disruptive.
WHEN THINGS
GO WRONG
30. When things go wrong, in whatever consumer
sector, it is important that consumers are able to get information
on their rights and to secure appropriate redress. The Internet
has made it much easier for consumers to obtain information, but
it has also increased the potential for consumers to get wrong
or misleading information.
31. In the UK, the Government's Consumer
Direct service is a comprehensive one-stop source of information
for consumers, which is easily accessible by telephone or on-line.
There are, in addition, specialist sources of more detailed information
that consumers can access either via Consumer Direct or directly.
The AUC is one such source of information for air passengers.
Delay and cancellation
32. Regulation EC261/2004 introduced new
entitlements for air passengers in the event of cancellation or
delays. Its coming into force in February 2005 attracted considerable
media interest. But, regrettably, this interest was accompanied
by inaccurate reporting of the new entitlements. The European
Commission's own website and information leaflet, that was widely
distributed in hard copy, was also misleading.
33. Despite pressure from many quarters,
the Commission did not withdraw its misleading information until
the European Ombudsman found against it in January 2007 in response
to a complaint from airline trade associations. This failure by
the Commission compounded passengers' difficulties in understanding
their entitlements, and they were understandably irritated when
the AUC—and others—gave them apparently contradictory
information. The AUC believes, however, on the basis of the complaints
and enquiries that it receives directly from air passengers, that
there is now an increasing awareness of the provisions of the
Regulation. As with any new legislation, awareness can be expected
to grow over time.
34. An innovative feature of Regulation
EC261/2004 is that it requires airlines to give passengers notice
of their entitlements at the time that the disruption to their
flight occurs. Setting aside any concerns as to whether the airline
information accurately reflects passengers' legal entitlements,
this has had the result of promoting a wide awareness of the existence
of the Regulation.
35. As with any new legislation, a settling
down period might be expected during which adherence was patchy.
The AUC found this to be the case with Regulation EC261/2004.
The AUC nevertheless believes this Regulation to have been a considerable
step forward in ensuring that passengers are less likely to be
out of pocket as a result of cancellation or delays.
36. It is clear, however, that airlines
are routinely citing the "extraordinary circumstances"
defence in the Regulation to avoid paying compensation for cancellations
in addition to looking after passengers (through provision of
meals and hotel accommodation etc) whilst they wait for alternative
flights. And the lack of definition of some key terms in the Regulation
has led to significant differences in interpretation of airlines'
obligations.
37. For passengers whose complaints (about
delays or cancellations) fall outside the scope of Regulation
EC261/2004, the Montreal Convention is the principal instrument
that passengers can use to support claims for redress. A key point
about the Convention, however, that it expresses airlines,' liability
as "damage occasioned by delay", which is more akin
to the concept of covering unavoidable expenses than of compensation.
That is, if a passenger has suffered no demonstrable financial
"damage", a claim for compensation under the Montreal
Convention is unlikely to succeed. Under such circumstances, any
redress provision depends on the goodwill (or commercial interest)
of the airline.
Other complaints
38. Complaints outside the areas of delay,
cancellation, denied boarding, or baggage, can be assessed primarily
against contact terms or, more subjectively, whether an airline
has failed to meet a passenger's reasonable expectations. Airlines'
generosity or otherwise in response to complaints is in part a
function of their market positioning. Customer relations functions
and their compensation budgets are overheads, and are an integral
component of an airline's general customer-service ethos. Passengers
need to understand that the speed and quality of response may
well reflect they price they have paid for their ticket.
CONCLUSION
39. The AUC has been a consistent exponent
of liberalisation: of allowing the air transport market to work
in providing what its customers want with minimal regulatory interference.
It also reserves the right, however, to take a view on minimum
acceptable service levels and treatment of passengers, and to
promote changes in practice or legislation, as it sees fit. It
therefore welcomes, and looks forward to the report of, this Transport
Committee inquiry into passengers' experience of air travel.
Air Transport Users Council
2 March 2007
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