Yahoo Finance BA ruined our break – but it still won’t pay out!
A family of six who lost their holiday to Portugal after the British Airways meltdown are still out of pocket, because neither the airline nor their travel insurer will pay out for the villa they were forced to abandon.
The family’s fight for compensation is an early indicator of the many more battles ahead for holidaymakers following the IT failure in which more than 700 flights were cancelled just as families were jetting off for the school break.
Sam Warren had planned the trip to celebrate her husband James’s 40th birthday. The family, from Maidenhead, booked with BA, paying “over the odds” – about £750 each – because they didn’t want to compromise on quality, and took out travel insurance with the Post Office rather than a cheaper provider.
BA was quick to refund the cost of the flights it cancelled and pay the compensation they were entitled to under EU law, but Sam says the airline and insurer have “washed their hands of us” when it comes to their accommodation. She adds that the whole affair has “shaken my faith in companies and brands upon whom I’d previously relied”.
Some commentators have argued that BA should offer those caught up in last month’s IT meltdown free flights as a gesture of apology and goodwill. Not only did the Warrens not get any free flights but, in what some might see as a petty-minded move, when BA refunded their air fares Sam was stripped of the Avios points she had earned on the original purchase. She had taken out a British Airways American Express card before making the booking so she could collect Avios points to put towards future BA flights.
Like millions of people, they booked with the resort directly and arranged their own flights, but now Sam wonders whether they left themselves “exposed” by not booking a standard package through a tour operator.
The week-long May half-term trip to Sagres on the Algarve had been planned for almost a year. The couple, their children (aged five and two) and James’s parents were all going. Because it was a big birthday, they also decided to spend more than they normally would on accommodation – a villa with a pool by the beach costing €3,000 (£2,620).
On 27 May when they arrived at Gatwick to catch their flight to Faro, it soon became apparent there was a major problem. They were told all flights were being cancelled and that they should leave and try to rebook.
It later emerged that the IT failure forced the airline to cancel a total of 726 flights over three days, which left at least 75,000 passengers stranded.
“It became apparent that we would receive a refund of the cost of our flights if we were unable to rebook, and we reasonably assumed we would be covered by our travel insurance for the cost of the accommodation,” says Sam. But she was told that the Post Office’s insurance claims team was not available over the weekend, and was also closed on the bank holiday Monday (29 May).
In spite of having had our holiday ruined and none of it being our fault, we are the ones out of pocket
“By Sunday we were able to access the BA website and it was clear that the earliest we would be able to fly to Portugal was the Wednesday. This was well over halfway into our planned holiday and was therefore not acceptable as our accommodation was only available until the Saturday. “Also, as my daughter was on half term we had no option to extend our holiday into the next week.”
The family scrabbled around to see what else they could book, but there was little available. Keen not to disappoint everyone they settled on four nights at Butlins in Bognor Regis, West Sussex.
Warren says it wasn’t until the Tuesday that they were able to speak to someone in the Post Office’s claims team. “We were read a ‘script’ about the British Airways problems, stating that we were not covered and we should claim from BA,” she says, adding that they were told the cover only extended to adverse weather, strike action or a mechanical fault.
“However, the only relevant general exclusions are for acts of war or terrorism. A system shutdown appears to be neither covered nor excluded – but, given that it is out of our control and unforeseen, it is impossible to see how it does not sit alongside those things which are stated as being covered.”
The family claim that the delay caused by the lack of anyone available to provide advice “caused us to suffer further losses” as they had had to make decisions, and they booked the Butlins trip “on the reasonable assumption that our policy would provide cover [for the accommodation]”.
BA refunded the cost of the flights and paid the family the €400 (£350) compensation to each person which they are entitled to under EU law, but told the family it is not responsible for any “consequential losses” suffered as a result of the cancellations. “So, in spite of having had our holiday ruined and none of it being our fault, we are the ones out of pocket.”
Once the EU compensation is taken into account, says Sam, “we are probably about £700 out of pocket on the accommodation”. The family’s single-trip travel insurance policy cost £52.
In a statement BA said: “We understand how frustrating it was for our customers to have their holidays disrupted last month, so we are pleased that within four days we were able to refund the full cost of the Warren family’s flights and pay compensation they were due. Thousands of families have already received their payments, and we have brought in extra staff to help process applications as quickly as we can.”
Meanwhile, a Post Office spokesperson said: “As advised by the Association of British Insurers, in the first instance customers should contact BA to make a claim for any irrecoverable costs and additional expenses under EU Passenger Rights legislation.
“Cover under a travel insurance policy varies depending on level of cover purchased. While the information provided to our customer was correct, unfortunately this was not put formally in writing and our specialist teams here will be responding to the Warren family directly.”
Who will meet a claim
While the Post Office has rebuffed the Warren family’s claim, it appears that several other travel insurers would have covered the cost of their villa.
Many policies do not cover “consequential losses” – ie, non-refundable hotels/villas, car hire etc, that you were unable to use because you couldn’t get there – but some do in certain situations. Aviva’s standard policy covers unused personal travel and accommodation costs where a customer abandons their trip as a result of their flight being delayed for more than 24 hours.
Direct Line and its Churchill arm have indicated that their policies wouldn’t normally cover this, but they have extended their terms for BA passengers., while Axa says it has been considering claims from BA customers, adding: “Independent travellers who have missed hotel stays or other pre-paid activities should contact us about their claim as soon as possible.”
Generally, insurers say people should be claiming from BA – but BA says it is something insurers should be covering.
So what’s the best advice? In terms of insurance, complain to the Financial Ombudsman Service. As for whether BA should be coughing up, this should be taken up with the Centre for Effective Dispute Resolution (CEDR), which runs an independent dispute resolution service that handles passenger complaints about BA, easyJet, Thomas Cook and Thomson.
It is free to use, and if your claim is successful you will receive 100% of the compensation directed. Only if your claim is thrown out will you be charged a nominal fee of £25. Barrister Richard Colbey wrote an article about the CEDR-run service for Guardian Money earlier this month.
