Civil Aviation (Insurance) (Amendment) (EU Exit) Regulations 2020

Baroness Randerson Excerpts

Thursday 18th June 2020 Lords Chamber

[Baroness Randerson (LD) [V]]

My Lords, there could not be a more appropriate time to discuss aviation insurance. When we eventually could hear the Minister I was pleased that she set out very clearly the SI’s intention. The EU regulations establish minimum insurance requirements in respect of passengers, baggage, cargo and third parties, but they also require carriers to have insurance that covers acts of war, terrorism, sabotage, unlawful seizure and civil commotion. As other noble Lords mentioned, I am sure that many people wish that that list covered pandemics as well. As the Minister said, this SI replaces the European Commission’s powers regarding this with those of the Secretary of State. Like others, I regret that the SI has to be brought and the causes of it, but I will take the opportunity to discuss some of the specific issues within it.

We have discussed insurance and consumers’ rights several times here in the last few years, but always in the context of the financial failure of an airline, and questions have been put on consumers’ rights in relation to payment methods. This SI puts the spotlight instead on the basic obligations of the airline operators.

The pandemic has placed huge stresses on the aviation industry in general and, as other noble Lords have said, some airlines have resorted to extreme delaying tactics to avoid repaying their customers for cancelled flights. Many consumers are waiting very long periods to receive refunds—the noble Lord, Lord Balfe, being one. Airlines are resorting to devious tactics to make it very difficult even to claim a refund; for example, by removing the refund request option from their website, so customers have to phone to request a refund but then find that the number is continuously busy. There is pressure to accept vouchers instead, but in the current uncertain situation is not surprising that customers consider that a risky option, and they may not wish to travel anyway. There are adverts tempting the public to purchase cheap flights in the near future, when it is highly unlikely that that flight will actually operate. The suspicion here is that this is a device to bolster short-term income for the airline. While all this is understandable at this difficult time, it is certainly not acceptable. Therefore, the level of guarantees and consumer rights provided by the EU regulations have proved valuable and the public will expect them to continue. They will expect Brexit to provide improvements to their rights—that is what those who supported Brexit thought would come. Certainly, they will not expect the EU to provide any improvements that are not immediately adopted in the UK.

Consumers who book linked travel arrangements, such as connecting flights, are often not fully aware of the national registration status of the airlines they choose to use. They might well start off with a UK airline but change planes midway on to an airline from another country. The official national status of airlines is often not obvious. Despite its appalling behaviour towards its employees, BA, for example, trades on its status as the British flag carrier, but it is Spanish-owned. Sometimes, one books with airline A and ends up flying with airline B, its so-called agent. All these uncertainties emphasise the value of a co-ordinated system of insurance and consumer rights, so my question to the Minister is: will the system guarantee the same level of co-ordination and ease of use for consumers in future?

Paragraphs 14.1 and 14.2 of the EM cover monitoring and review and make it clear that no systematic review process is planned. However, paragraph 7.2 shows that the EU regulations have a five-year mechanism for review built in, so there is surely the danger that our regulations will become outdated by default. I would be grateful for the Minister’s comments on this. Finally, on the issue of consultation raised by others, paragraph 10.1 states that the CAA “has been consulted” and was happy with the changes proposed. It does not refer at all to the insurance industry. It goes on to say:

“The devolved administrations and the aviation industry have been informed”


of the Government’s intention. That is a new choice of words to me. It sounds very high-handed. It is against all the usual courtesies of the devolution settlements and it puts us back at least 30 years in the way that, by convention, government works with business. I ask the Minister to address this specific point: is this just a one-off or is it the way the Government intend to do business in future? A very long time ago it was accepted that good government relies to a great extent on partnership and consultation with those within each sector, which leads to a more effective way of doing things. I hope that that will not be abandoned.