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The aviation watchdog has warned airlines that they are legally required to provide refunds to customers who had their flights cancelled because of the coronavirus.
By law, plane operators must refund customers within seven days if their flight is cancelled.
But with fewer than 10% of UK flights taking off, airlines are struggling to deal with all the requests for refunds.
The Civil Aviation Authority (CAA) said it could take action against airlines.
“We are reviewing how airlines are handling refunds during the coronavirus pandemic, and will consider if any action should be taken to ensure that consumer rights are protected,” the regulator said in a statement.
Last month, consumer group Which? said it had received thousands of complaints from people struggling to secure a refund for their cancelled travel. Instead, airlines were offering customers vouchers to be used when lockdown are lifted.
Science ‘Systematically denying refunds’
The travel industry’s own estimates suggested £7bn of travellers’ money was affected, Which? said.
Now the CAA has stepped in. “Under the law, consumers are entitled to receive a refund for their cancelled flights, despite the challenges the industry is currently facing,” it said.
“We support airlines offering consumers vouchers and rebooking alternatives where it makes sense for the consumer.
“But it is important that consumers are given a clear option to request a cash refund without unnecessary barriers.”
The regulator said it did not expect airlines to “systematically” deny consumers their right to a refund.
“We expect airlines to provide refunds for cancelled flights as soon as practically possible, whilst appreciating there are operational challenges for airlines in the current circumstances.”
Ryanair boss Michael O’Leary has said it will take up to six months to refund passengers for flights cancelled because of the coronavirus pandemic.
He told the BBC that the airline was struggling to process a backlog of 25 million refunds with reduced staff.
Airlines have been forced to ground the majority of their fleets because of the crisis, which has all but eliminated demand for air travel.
As a result, British Airways, Virgin Atlantic and Ryanair have all announced thousands of job cuts.
Airlines have also said that plans to introduce a 14-day quarantine period for anyone arriving in the UK from any countries apart from the Republic of Ireland and France will further hurt demand.
UK airports suggested that a quarantine “would not only have a devastating impact on the UK aviation industry, but also on the wider economy”.
Karen Dee from the Airport Operators Association, which represents most UK airports, said the measure should be applied “on a selective basis following the science” and “the economic impact on key sectors should be mitigated”.