Automatic Travel Compensation

Huw Merriman Excerpts

1st reading: House of Commons
Tuesday 21st November 2017 Commons Chamber

[Huw Merriman (Bexhill and Battle) (Con)]

I beg to move,

That leave be given to bring in a Bill to make provision for passengers to receive automatic compensation from travel operators in certain circumstances; to require train operators to ring-fence certain funds received from Network Rail for service disruption and planned possessions for the development of ticketing technology to facilitate the payment of automatic compensation for passengers; and for connected purposes.

In short, my Bill would ensure that passengers on trains, flights and other domestic transport systems automatically received in their bank account the delay repay compensation due to them without first having to work out their rights or apply for it. The mechanism for claiming refunds for delays and cancellations is complex and cumbersome. As we found with Ryanair, the rules are not always explained correctly—or explained at all—to passengers. This comes at a time when innovation in technology should be lessening the need for passenger administration and red tape. Let me use rail and flights as examples, although this Bill would also apply to trams, ferries and other paid modes of transport.

Let me first turn to rail, in which I declare my current interest as a 12-year veteran of the daily commute from East Sussex to London. Nearly 67 million rail journeys last year were either cancelled or were significantly late. These delays can lead to lost output, financial hardship and stress. Passengers expect adequate compensation for these difficulties. To implement this fully would incentivise the train operators and Network Rail to do more to prevent these issues from occurring in the first place. This would, in turn, increase our nation’s productivity.

A number of steps have been taken in the past year, including the strengthening of the Consumer Rights Act 2015 and the introduction of Delay Repay 15 for Southern and new franchises, but only a third of rail passengers who are owed compensation make a claim. Network Rail currently makes payments to train operators for all the delays that it has caused through track and infrastructure failures. However, if only a third of the passengers who experience the delay claim for it, the remainder must be retained by the train operators. My Bill would require the train operators to ring-fence this excess so that it could be used only to advance technology that would allow every passenger to touch on, and off, their train. Having pre-registered account details, the passenger would automatically receive compensation in their bank account on the day they were inconvenienced.

None of this should be particularly complicated. Six of the 27 train operators have some form of automatic compensation for certain passengers. Among the six, I understand that Virgin Trains West Coast offers it to passengers who book directly, and that Govia Thameslink, via its three operators, and c2c offer automatic compensation to season ticket holders. Providing compensation as some sort of perk to certain classes of ticket-holders is missing the point, and distorts competition in the ticket-buying market. Every passenger is entitled to compensation. If the technology exists, it must be applied to all. Where compensation is not going to the passenger, the taxpayer-funded compensation coming from Network Rail must be used by all train operators to get us to a place where compensation is automatically delivered to every passenger so entitled.

Let me now turn to flights. The situation is arguably worse with airlines, as the recent debacle at Ryanair demonstrated, with 2,100 flights being cancelled and 315,000 passengers of Ryanair being left completely out of pocket. However, the company’s website failed to mention the word “compensation”, stating only that it would comply with EU regulation 261/2004. Unless passengers happen to be experts in EU regulations, they will not realise that this rule-set provides compensation and assistance to passengers in the event of denied boarding, cancellation, delays and downgrading when flying. The Civil Aviation Authority had to threaten enforcement proceedings before Ryanair informed its customers of their compensation rights.

This is not new ground for the CAA. In the last six years, it has successfully taken action against a number of airlines, including Ryanair, for a range of issues including non-payment of compensation and providing limited information to passengers. All of this can be avoided. It must be possible to put the onus on the airline to calculate compensation and credit it automatically. For security reasons, every airline must know which flight a passenger is booked on, and know whether that flight has been delayed or cancelled. They also know a passenger’s account details, or can find them via the flight booking agency.

I put this contention to the chief executive of British Airways when he appeared before the Transport Committee last month, and asked him why automatic compensation could not be brought into his industry. His response was to state that

“we will pass that cost on to the consumer, like we always do. We do not operate as a charity.”

That defensive response was revealing. For there to be a cost to pass on suggests that many passengers are not claiming for delays or cancellation because they do not know their rights or find it too cumbersome to claim. We simply do not know the position, unlike in the rail industry. From what the chief executive of British Airways said, it seems that we are unlikely to find out without a change in approach or legislation. When I asked him what proportion of passengers claimed and were paid compensation, he remarked:

“I am not prepared to disclose that. That is commercially sensitive”.

Despite my asking him repeatedly why an answer would give his rivals the upper hand, no additional information was forthcoming.

The previous week, the Transport Committee had heard from the Secretary of State for Transport—who, I should add, does an excellent job, and I hope that the adoption of this Bill by the Government will further his ascent to the skies. I asked the Secretary of State for his views on automatic compensation. He took the view:

“This is not a one-size-fits-all industry. It is a big step for Government to intervene to try to tell businesses how to operate. If there is an absolutely compelling reason to do so, Government act sometimes”.

That, to me, summarises the situation, and it provides the justification for the Bill.

The airline industry has to adopt a one-size-fits-all approach from rules driven by UK Border Force, the Civil Aviation Authority, NATS, the European Union and other agencies and regulators. I believe that the airline industry can take this additional step, and I believe that train operators and those running our ferries, trams, buses and other modes of transport could do likewise. The compelling reason for Parliament, and the Government, to do so is that millions of passengers not only are being inconvenienced by delays, but are not being compensated. It is time for those responsible for the passenger to give something back without further work for the passenger.

I thank the 50 right hon. and hon. Members—many of them are here this afternoon—who have pledged their support for this proposal. It follows the murmur of approval across the House when I asked the Prime Minister to support this change during Prime Minister’s questions. There are many things that the arithmetic of this place will not allow us to deliver. This is one change where the consumer will benefit from our working together, cross-party in Parliament, to cause the industry to change its approach.

Question put and agreed to.

Ordered,

That Huw Merriman, Tom Brake, Maria Caulfield, Douglas Chapman, Sir Jeffrey M. Donaldson, Lilian Greenwood, Peter Kyle, Ben Lake, Caroline Lucas, Tim Loughton, Iain Stewart and Daniel Zeichner present the Bill.

Huw Merriman accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 16 March 2018, and to be printed (Bill 129).

[Chris Bryant (Rhondda) (Lab)]

On a point of order, Mr Speaker. I am sorry about this, but I have had so many people come up to me and ask, “Are you all right, Mr Bryant?” or “Were you abducted by the Russians?”, that I thought I should explain why I was not present for the first question in Foreign and Commonwealth Office Question Time: it was my own incompetence—nothing more than that.