Millstream perceptive underwriting



News Archive

Flight prices set to rise following landmark compensation ruling

A Court of Appeal judgement in the Huzar versus case means airlines may no longer be able to use technical faults as a blanket excuse to avoid compensating passengers for flight delays.

Jet2 has vowed to lodge an appeal against the decision, but if this fails and the judgement stands, ticket prices could rise as airlines try to protect themselves against a sharp jump in the number of claims.

"From a customer perspective this recent case and the knock on effect may well drive air fares up," said Hannah Clipston, partner at Thomas Eggar LLP,

"Therefore, while Mr Huzar may feel he has secured a personal victory for consumers for the time being, the opposite may well prove to be true in the long term."

She said airlines now have to make sure ticket prices have a built-in provision for compensation claims and decide what level to set.

"If this provision has already been made, it is vital to ensure that the provision has been preserved and is available to pay claims where appropriate," she said.

She said airlines must also consider whether it is possible to take out insurance to deal with claims and examine how this will affect the premium payable.

They must also review maintenance and service programmes and related contracts to ensure that the highest levels of service, performance and record keeping are being maintained.

Not only do they have to minimise the chance of technical problems occurring at the last minute but they must also make sure they can demonstrate to a court why a technical problem has not arisen from the normal exercise of the airline's activity.

"They must also review policies on how the claims are dealt with internally and/or by external lawyers and ensuring appropriate levels of training," she added.

The CAA has warned airlines to expect a rush of claims following this week's decision and is currently preparing advice and guidance for them.

Previous Next