We need a fix for flight-delay payouts

From time to time, well-meaning regulations intended to protect consumers have perverse consequences. A case in point is the regime put in place by the European Commission to compensate airline passengers whose flights are delayed.

How can it be fair, for example, for one passenger on a delayed flight to be recompensed for the inconvenience, but for the person across the aisle to have their claim denied? Surely it would make more sense to make decisions flight-by-flight, rather than passenger-by-passenger. And why is it reasonable that a payout for a delay can be four or five times the price of a budget airline ticket?

Airline delays are a nuisance all round – to passengers, to staff, to the carrier itself. I speak from experience: for the last 16 years, we’ve built Jet2 to become Britain’s third largest airline.

Occasionally things go awry, and if it’s the airline’s fault it is right that the airline should recompense passengers.

The European Commission has fixed compensation levels for travellers held up by three hours or more: for a short flight to a destination such as Paris it’s €250 (£218) per passenger, but for further afield – Spain, Greece or Italy – it’s €400. These sums were originally designed for cancelled flights but now apply to delays too.

For a holiday airline, these amounts are high. Our typical fare is £80. There is no link, under the EU’S rules, between the price paid for a ticket and compensation for a delay, which seems very unfair. For a delayed flight of 189 people, the bill is around €75,000. If that aircraft’s return leg is disrupted too that’s a bill of €150,000. But the law is the law and we respect it.

The law is complex – it states that if a delay is caused by “extraordinary circumstances, which could not have been avoided even if all reasonable measures had been taken” then compensation is not payable. Interpreting this has made the legal profession a lot of money – the courts have arbitrated, for example, on whether an airline is required to pay out if a plane has a technical problem (we do), or in the event that a “bird strike” damages an engine (we don’t).

For the vast majority of claims, Jet2 pays straight away. But for a handful, there’s a disagreement. The way these disputes are handled is problematic. This is a technical area of the law that needs to be applied consistently. The Civil Aviation Authority, in the past, has used an in-house team to adjudicate a system which works well. However, in recent years the CAA has been urging airlines to sign up to alternative dispute resolution (ADR) schemes, where it has appointed two third-party providers.

These two bodies – called Aviation ADR and CEDR – sometimes struggle with the weight and complexity of claims. They use various adjudicators, often without full legal qualifications, to assess very technical issues. There is an imbalance of fairness in that rulings are binding on the airline – but not on passengers, who can go elsewhere to challenge an outcome.

ADR schemes of this genre are unsuitable for resolving issues running to six-figure sums around a poorly drafted piece of European legislation. And it is concerning that under its proposed aviation strategy, Aviation 2050, ministers are considering making them compulsory.

A few principles ought to come into play. At present, adjudications are made on a passenger-by-passenger basis, which sometimes means two people on a flight get different outcomes. It would be far more sensible for the first ruling on each flight to be a “reference” one that then applies to all the other passengers.

Both the consumer and the airline should be treated equally with equivalent rights of appeal on a ruling. Finally, we need to resolve these disputes without the involvement of ambulance-chasing “claims handling” firms, which take up to 40pc of passengers’ compensation.

It’s time to revert to common sense with a simple, fair and effective mechanism for resolving complaints. If we are to use ADR providers, their decisions must be consistent, hold sway flight-by-flight and, if dubious, be subject to appeal.

‘Why is it reasonable that a payout can be four or five times the price of a budget fare?’