Select Committee on Transport Written Evidence

Memorandum submitted by the Air Transport Users Council (PEAT 05)


  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.


  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.


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).


  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.


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.


  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.


  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.


  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.


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.


  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.


  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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