Air passengers will be able to claim millions of pounds in compensation for cancelled flights after a secret deal between British Airways and a group of complainants, The Times has learnt.

The settlement, agreed after months of negotiations, could end the frustrations of passengers who are left stranded at airports and unable to claim redress for ruined holidays and aborted business meetings.

Among those who may be able to claim compensation are the thousands of passengers stuck at Heathrow during the fiasco of Terminal 5’s opening days last year.

The breakthrough comes after British Airways paid a group of passengers, including 21 Britons, an average of £388 each for cancelling their flights. The payments are BA’s first to British claimants.

The private settlement could leave BA vulnerable to multimillion-pound claims at a time when it is freezing staff pay and seeking voluntary redundancies, after reporting a £70 million loss in the first nine months of its financial year.

Lawyers and aviation analysts said that the settlement might open the gates to many more claims against other airlines, possibly stretching back six years for British passengers. Airlines based in the European Union and flying anywhere in the world, and international carriers with flights out of EU airports, are vulnerable to claims after the settlement.

One of the turning points was a ruling by the European Court of Justice that airline passengers were entitled to compensation when a flight was cancelled because of a technical fault. At least five of the claims paid by BA last week were triggered by this judgment.

Under EU law, airlines are obliged to offer compensation to passengers for cancelled flights, unless they offer alternative travel arrangements or if extraordinary circumstances apply. Consumer groups and the European Commission have accused airlines of abusing the “extraordinary circumstances” clause to avoid paying redress.

EUclaim, a claims-handling company based in the Netherlands, has compiled details of thousands of cancelled flights across Europe and has shown that airlines often use the term “extraordinary circumstances” to explain away technical faults and staff shortages.

The handling company acted with the law firm Lavelle Coleman on behalf of the 21 BA passengers. It said that it had been contacted by hundreds of other British BA passengers who are seeking compensation for cancelled flights, and also by easyJet customers.

EUclaim has already started one set of proceedings against BA in Britain on behalf of a further 23 passengers. This case is likely to be heard in the summer.

Mike Rattenbury, an associate solicitor at Lavelle Coleman, said: “The settlements with BA are particularly important not only in the context of the claims brought by UK passengers, but those claims Europe-wide. It not only shows that European Union regulations can work for passengers in practice, but also that airlines cannot evade their liability and responsibility to passengers.

“We hope that airlines will now step up to their responsibility under the legislation and understand that passengers will not simply roll over and let their basic legal rights be ignored.”

An analysis of aircraft movements published last October suggested that BA was the worst national carrier in Europe for cancellations. The airline scrapped one in 50 of its flights to and from Heathrow last year, EUclaim said. BA operates more than 250,000 flights a year, looking after more than 30 million customers.

Peter Morris, chief economist at Ascend, a leading aviation consultancy, said: “This could open the Pandora’s box for retrospective pay-outs and an ongoing loss of revenue that BA wasn’t banking on. In terms of the scale of the potential impact, it [the recent compensation settlements] is very significant.”

The crucial European Court of Justice decision was published on December 23. It said that Alitalia had to pay cancellation compensation to an Austrian family who were stranded after a technical fault with their aircraft. Earlier in December, BA had agreed to pay 17 claims, which all related to flights cancelled last year for a variety of reasons.

Among the 17 claims was one relating to three passengers whose flight from Heathrow to Calgary was cancelled on March 28, the day after the botched opening of T5. BA agreed to pay their claim only after EUclaim referred the case to its lawyers.

BA said: “We continue to comply with the relevant European legislation and will always look at each claim that is made against us on its individual merits.

“In light of the recent European Court of Justice ruling, about the definition of what constitutes a technical fault regarding a flight cancellation by Alitalia, we reviewed a very small number of cases made against us and agreed to settle their claims, without admitting liability.

“This ruling applies to all airlines operating flights out of any EU country.”

Flight plans

30% of scheduled flights at the top ten UK airports were delayed in the third quarter of 2008

41% of charter flights at the same airports were delayed

145.8m passengers used BAA airports during that period

Source: BAA/CAA

How to claim if your flight is cancelled

— The compensation you are entitled to depends on how far you were going to fly and what, if any, alternative flight the airline offers

— You don’t have a right to compensation if you’re offered rerouting on a flight that leaves no more than one hour before the original flight booked and is scheduled to arrive no more than two hours later than the original flight

— You don’t have a right to compensation if the airline can show that the cancellation was caused by “extraordinary circumstances that could not have been avoided even if all reasonable measures have been taken”

— In the first instance complain to the airline. Keep copies of everything, including your ticket

— If the airline won’t pay, you could take the dispute to court or you may be able to claim compensation from your credit card issuer

— If the card issuer refuses to pay, refer the dispute to the Financial Ombudsman Service

— If you still get unsatisfactory results, consider taking action against the airline through the small claims court Before starting court action you must have made every attempt to resolve the dispute without the need for court intervention

Source: Which?

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