British Airways and Ryanair are being investigated over whether they broke consumer law by refusing to give refunds to people “lawfully unable to fly” during lockdowns.
The Competition and Markets Authority (CMA) said it had launched enforcement action against the two firms and was concerned that by failing to offer customers their money back it had left them “unfairly out of pocket”.
It prompted a sharp response from British Airways, which accused the government of “seeking to punish further an industry that is on its knees”.
The CMA said it had written to the airlines to try to resolve its concerns “which may include seeking refunds, or other redress, for affected customers”.
The action comes after the CMA opened an investigation into the wider airlines sector in December over consumers being denied refunds for flights they could not legally take – though it did not name individual carriers at the time.
In its latest announcement, the watchdog said: “During periods of lockdown across the UK, British Airways and Ryanair refused to give refunds to people that were lawfully unable to fly, with British Airways offering vouchers or rebooking and Ryanair providing the option to rebook.”
The CMA said it was concerned that by failing to offer people their money back, both firms may have breached consumer law, though it stressed that it should not be assumed at this stage that this was the case, adding that only a court could come to such a conclusion.
Andrea Coscelli, chief executive of the watchdog, said: “While we understand that airlines have had a tough time during the pandemic, people should not be left unfairly out of pocket for following the law.
“Customers booked these flights in good faith and were legally unable to take them due to circumstances entirely outside of their control.
“We believe these people should have been offered their money back.”
The CMA said its investigation related to periods “when it was unlawful in one or more parts of the UK for people to travel for non-essential reasons” and covers flights that were not cancelled.
Ryanair has told the CMA that it repaid a small number of people “having reviewed the specifics of their cases”, the watchdog said.
A British Airways spokesperson said it the carrier had issued more than 3 million refunds during the crisis and helped millions change their travel dates or destinations.
“We continue to offer highly flexible booking policies at the same time as operating a vastly reduced schedule due to government-imposed travel restrictions, and we have acted lawfully at all times,” the spokesperson said.
“It is incredible that the government is seeking to punish further an industry that is on its knees, after prohibiting airlines from meaningful flying for well over a year now.
“Any action taken against our industry will only serve to destabilise it, with potential consequences for jobs, business, connectivity and the UK economy.”
Ryanair said: “Ryanair has approached such refund requests on a case by case basis and has paid refunds in justified cases
“Since June 2020, all our customers have also had the ability to rebook their flights without paying a change fee and
millions of our UK customers have availed of this option.”
The latest action comes after the watchdog last month forced package holiday firms Teletext Holidays and Alpharooms to hand back £7m to customers who saw their holidays cancelled due to the COVID-19 pandemic.
That followed similar agreements made by LoveHolidays, Lastminute.com, Virgin Holidays and Tui UK, after thousands of customers complained that the companies had failed to refund them.
Britain’s airline sector has been one of the hardest hit by the pandemic – and as much of the economy has started to reopen after lockdowns severe restrictions remain in place on overseas travel.
The industry has reacted with dismay to the government’s “traffic light” system of restrictions, which leaves heavy curbs on trips to popular summer holiday destinations.
Meanwhile, US authorities have eased travel recommendations relating to dozens of countries but not the UK – despite a coalition of transatlantic airline chiefs calling for a travel corridor between the two nations.