Aviation minister Kelly Tolhurst is due to write to MPs this week to explain why airlines are failing to pay refunds for cancelled flights.

Airlines continue to press the government to relax the requirement under EU Regulation 261 on air passenger rights to refund consumers within seven days, but they appear to have diminishing hope of an imminent change.

A senior industry source said: “Logistically, airlines can’t pay the refunds. They can’t deal with the backlog. One major airline is paying 50 refunds a day. The law was not meant for this type of situation.”

The source confirmed: “The aviation minister will set out why passengers are not receiving refunds, explaining airlines lack the ability to comply with the law. But nothing suggests any change is imminent on Regulation 261.”

EasyJet chief executive Johan Lundgren noted last week that easyJet is “one of the few airlines in Europe processing refunds”.

Dale Keller, chief executive of the Board of Airline Representatives (BAR-UK) called for “a pragmatic solution to a situation where the industry can’t manage the volumes or timelines of the regulation”.

He said: “This is a liquidity issue. I’m hopeful the government will issue some sort of revised timeline. Clarity would be good for the consumer, for the airlines, for the entire travel industry.”

Keller noted: “Fifteen EU member states have issued guidelines [on refund vouchers or credit notes]. The best would be if the UK issued similar guidelines.”

Another aviation source said: “The 15 member states have written to the EC saying ‘Allow vouchers’. It’s an absurd situation. The UK is more loyal to European law than founding EU members, the Germans and the Dutch. But EU law is a convenient excuse.”

The source insisted: “lobbying by consumer groups” is preventing ministers temporarily modifying the rules.

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