IAG set to make millions from unclaimed flight vouchers

ByRichard

September 7, 2023
British Airways is to cancel more than 300 flights to and from Heathrow over the Easter holiday period due to strikes by airport security staff.British Airways is to cancel more than 300 flights to and from Heathrow over the Easter holiday period due to strikes by airport security staff.

The owner of British Airways is sitting on a potential windfall profit from hundreds of millions of pounds worth of flight vouchers issued during the pandemic and never redeemed.

IAG, which also owns Iberia, Aer Lingus and Vueling, revealed in its last annual report that it had about £550 million worth of unclaimed vouchers. British Airways and other airlines offered passengers vouchers rather than refunds when their flights were cancelled at short notice. Thousands of passengers took up the offer, but a substantial number have not claimed their new flights.

The group could book the amount outstanding as revenue — and enjoy a welcome boost to profit — once the vouchers expire. Most were due to run out this year, but British Airways has pushed back the cut-off date to the end of September next year. IAG said it would not provide an update on the amount outstanding until its next set of annual results in February.

The vouchers were controversial when first issued. The Competition and Markets Authority investigated British Airways and Ryanair over their refund and voucher policies two years ago, but concluded that the law did “not provide passengers with a sufficiently clear right to a refund”. If IAG were to book profits from the vouchers, it would again stoke debate about consumer protection in aviation. It flared after last week’s air traffic control meltdown left thousands of passengers stranded and having to fork out for replacement flights and accommodation.

Consumer advocates say airlines should be forced to give full refunds rather than wait for customers to take up vouchers. “When flights were grounded during the Covid pandemic, many airlines asked their customers to help them out by accepting vouchers rather than refunds for cancelled flights,” Rory Boland, travel editor at Which?, said.

“This is yet another example of airlines leaving their customers in the lurch and reinforces why it is vital for the prime minister to use the King’s Speech to give the Civil Aviation Authority powers to fine airlines directly when they break the rules.”