By Katie Morley, consumer affairs editor;Credit The Telegraph
British airlines have unlawfully pocketed nearly £300m in taxes paid by passengers who have cancelled or missed their flights, barristers say, as they prepare to take legal action to help millions of passengers get their money back.
For years, carriers including British Airways, Ryanair, Monarch, Jet2 and Virgin have effectively denied passengers air passenger duty (APD) refunds where they are rightfully owed by charging them “excessive” fees to reclaim it.
In many cases these so-called “administration fees” far exceed the value of the tax being refunded, making a genuine reclaim impossible.
For example Jet2 charges £40 for reclaiming APD worth £13 for a short-haul economy flight, while BA charges up to £30 for the service.
Airlines claim these fees are to cover the cost of processing refunds.
Telegraph Money @MoneyTelegraph
Air Passenger Duty has been abolished for children between 12 and 15 today. Here’s how to get a refund http://www.telegraph.co.uk/tax/news/looking-for-a-refund-of-air-passenger-duty-these-are-the-airline/ …
11:33 PM – 1 Mar 2016
But the legitimacy of this has been called into question as it has emerged they are running a free, automated refund service for parents who booked flights for young offspring before the Government scrapped the duty for under 12s earlier this year.
APD is an excise duty which is charged to passengers boarding large aircrafts from a UK or Isle of Man airport. It costs up to £73 depending on the type of flight and is collected by airlines at the point of ticket purchase, but is only due to be paid to the Government if passengers board the flight.
Airlines must keep strict records of which passengers board flights and which don’t so they know how much to pay the taxman at the end of each month, HMRC told the Telegraph.
This means unless passengers claim a refund airlines retain a portion of their ticket price which is equivalent to APD.
Last night consumer experts labelled the airlines as “dishonest” and “irresponsible”. They compared their behaviour to the recent airport VAT scandal, in which retailers asked for customers’ passport details so they could claim tax breaks, which they secretly kept.
Calculations done by Casehub, the claims firm organizing the legal action, suggests that over the past six years airlines have retained £287m of tax which rightfully belongs to passengers. This is based on 2pc of short-haul passengers, and 0.5pc of long-haul passengers missing their flights, as well as 2pc annual interest added to the sum.
Barristers at 4-5, a law firm, allege that the administration charges are in breach of the Consumer Rights Act 2015 because they are “excessive, do not provide a true service to the customer, and are designed to discourage or have the effect of discouraging the passenger from seeking reimbursement.”
James Daley, director at Fairer Finance, a consumer campaign group, said: “Just like with the airport VAT scandal, this is an example of the air industry taking advantage of customers’ good will. Any responsible company would offer automatic refunds for tax that is owed to customers, and charging such prohibitive fees is incredibly bad practice.”
Michael Green, founder at Casehub, said: “The airlines do not charge an admin fee to HMRC for transferring the APD. And they are not charging passengers when they were made to refund APD for children. This is not OK, but now passengers have the ability to collectively stand together and sue to get their money back.”
A spokesman for Monarch said: “Our administration charge is a reflection of the overall costs that are incurred by us in making refunds, including APD which is paid at the time of booking.”
A BA spokesman said its policy was “in common with many other airlines”.
A Virgin Atlantic spokesman said it does not charge for refunding children’s APD as the need for it arose from a change in legislation, rather than a non-refundable cancellation.
Ryanair said a “tiny” number of passengers reclaim APD after failing to make a flight.
Jet2 declined to comment.