British Airways Is Trying To Get Out Of Paying Compensation For Their IT Meltdown

British Airways had an absolutely disastrous weekend. On Saturday they had an IT meltdown, which they were clearly woefully unprepared for. Hundreds upon hundreds of flights were canceled to the point that the airline shut down altogether for hours, and even early this week their operations still aren’t fully recovered.

Mistakes happen, but one thing that’s clear is that British Airways doesn’t really care about making this right for customers. They’ve inconvenienced tens of thousands of travelers, though refused to reimburse them for tickets on other airlines, even when they had no decent ways of getting people to their destinations.

There were plenty of empty seats out of Heathrow this weekend that British Airways passengers would have loved to be in, but unfortunately the airline decided to stay true to its low cost carrier business model instead.

This raises an interesting question as to what kind of compensation impacted passengers are entitled to.

Unlike other regions in the world, the EU actually regulates the compensation airlines have to pay passengers in the event of delays or cancelations. This policy is called “EU261,” and mandates that airlines pay passengers cash compensation ranging between 250EUR and 600EUR, depending on how long their flight was scheduled to be, and how badly they were delayed.

This compensation has to be paid under a vast majority of circumstances, including mechanical failures, crews showing up late, etc. But British Airways is already telling passengers that they won’t be paying EU261 compensation for their IT meltdown.

Why? Because airlines don’t have to provide cash compensation in the case of “extraordinary circumstance,” which could not have been foreseen. This includes things like natural disasters, political unrest, bad weather, and oddly, strikes.

I’ve always thought it’s a bit weird that strikes are an exception to this rule, as they seem to neither be extraordinary (given how often they happen), and can also quite easily be foreseen. Maybe airlines would be more motivated to get labor relations under control if they had to pay cash compensation every time passengers were impacted by a strike.

Is it fair of British Airways to claim that the IT meltdown is an “extraordinary circumstance” for the purposes of this? I’d say no. Arguably the IT meltdown could have been prevented, and there was some level of negligence somewhere along the way that caused this. In the same way that a mechanical failure with the plane would be eligible for cash compensation, you’d think an IT failure would be treated similarly.

British Airways claims that this IT disaster was caused by a “power supply shortage,” though power companies are reporting no outages. So on top of everything else, we really don’t know what happened.

So, where does this leave those impacted by British Airways’ IT meltdown?

  • You could contact British Airways directly (which is the usual way you’d request cash compensation), though you’ll be denied, since they’re claiming it’s an extraordinary circumstance
  • You could use a service that will fight the claim for you, though they’ll take a portion of your compensation (if successful)
  • You could wait it out a bit, and see what happens

Personally I’d go with the last option. There are probably millions of pounds of compensation at stake here, so I suspect we’ll shortly see this topic go to courts. While you can go at this individually, at least for the time being I don’t think different people will get different results. In other words, I think that even one of those compensation services wouldn’t be able to get the compensation just yet.

Regardless, the way British Airways is handing this is horrible. While they’ve apologized in words, they haven’t in actions. They haven’t been good about rebooking passengers on other airlines, and haven’t outlined any sort of compensation they plan on offering. While it would be expensive, you’d think that as a goodwill gesture they’d at least offer this EU compensation. It would make them look good, and odds are that courts will find that they have to pay it out anyway. But instead they’re telling inconvenienced customers to pound sand.

What do you think — should British Airways have to pay EU261 compensation for their IT meltdown? If so, how much of a fight do you think it will take?

Comments

  1. Absolutely. It was entirely their responsibility to ensure a backup was in place in case the main system failed.

    A more advanced backup than writing gate numbers on whiteboards mind you.

  2. They really should be paying, IT malfunctions and outages such as this one could have easily been avoided my backup servers and generators. BA’s stinginess caused this in the first place yet they are still unwilling to pay

  3. I really hope this goes to the courts and BA is really taken to the cleaners. It’ll be one step too far for many BA travellers recently.

  4. I don’t know what your source is for this; all the coverage in the English media simply assumes that BA will have to pay under Euro regulations – eg, see:
    https://www.theguardian.com/business/2017/may/30/british-airways-ba-owner-drops-value-it-meltdown

    Since these regulations were introduced, the English High Court has been spectacularly unsympathetic to any airline trying to wriggle out of paying compensation under the EU regime (Ryanair spent squillions trying not to pay, and utterly failed to persuade the judges to move an inch).

    I would be staggered if BA tries not to pay out. And I would be even more staggered if, having done so, the courts did anything other than order them to pay up.

    Your source?

  5. I’ve used option 2 before through Resolver, and they didn’t claim any part of the compensation. But true – this will likely be won through a class action.

  6. All the airlines should consider making a long term deal together so that a failure of one is a failure of all and they agree take each other’s passengers to their destinations in the event of a problem. The airlines could also all pay for hotels and meals out of a fund if there is a delay.

  7. This won’t get to a class action. BA will pay.

    Here’s what the BBC is reporting:
    “A BA spokesman said: “We have been giving letters to customers telling them how to claim under EU compensation rules and we will fully honour our obligations.”
    Source: http://www.bbc.co.uk/news/business-40082519

    I’m not sure how Lucky has managed to turn that into a claim that BA *won’t* be paying out under the EU compensation rules, but perhaps he has a more authoritative source than the BBC?

  8. Exempting strikes from EU 261 means that labor groups can’t hold the airline hostage during wage negotiations. So for those in favor of higher wages for labor, you would prefer to have strikes included, since management would have an incentive to throw money at labor just to keep the airline running. But ultimately that would also result in higher fares…

  9. BA should take note that (as far as I’m aware), when there was a system outage Delta paid EU comp for all affected customers departing the EU

  10. @Lucky
    Thanks for the link. I’m not sure what monkeys are employed to deal with Twatter comments, but “operational circumstances” which are in the airline’s control are absolutely covered by the EU regulations.

    I can’t imagine *any* circumstances in which the English courts would consider ensuring you have adequate IT systems and a reliable power system as not being within the airline’s own control. They might be a bit sympathetic if BA was the victim of a massive hack attack, but even BA is not claiming that.

  11. @Lucky – I’ve got to agree with @Paul here. I simply can’t conceive of a way that BA could convince the courts that the farcical circumstances they found themselves in are anything but their own fault. The fact that they have compounded the errors by the appalling way they have dealt with it and the ludicrous Alex Cruz in his hi-viz vest, won’t (yet) step down are regrettable, but there will be no need for a class action here. They will pay, at least that for which they are obligated by EU regulation. There will of course be those that expect almost any cost, no matter how unrealistic, to be compensated, which makes good coverage online and the press, but for the vast majority they will receive what they are statutorily entitled to.

  12. Already had both of my EU261 claims approved and full refunds for my canceled flights so I’m not really sure where you get your facts from……ironically I flew home on United.

  13. Lucky, did you see Emirates’ IG post?!?!?
    They’ll reveal a new F product this November

  14. One thing for sure, nobody would like to fly with BA in near future.

    I do curious, compared to MAS which lost 2 planes in a row, which one people avoid most?

    Further, how this incident affect air travel industry? AF-KLM, Lufthansa, SAS and other might see this as a bussines opportunity. Air Jordan might already be rolling new travel ad…. what is your view on this Ben?

  15. On one hand, you note that there is, as of yet, no definitive explanation for the cause of this problem. On the other hand, you assume that there is some degree of negligence involved.

    Not every bad outcome in life is the result of an individual’s or corporation’s negligence. Please…

    Having said that, BA should be required to follow the law/regulations. Nothing more, nothing less. If they choose to do more than required, that is up to them and may foster goodwill. They should not be allowed to do less than what is required.

  16. There is opinion from national UK body responsible for EU261 compensation queries which states that airline staff strikes (as opposed to air traffic control staff strikes) might be eligible for EU261 compensation. It all depends on how much the airline has taken action to avoid the strikes, and their attempt to minimise the effect of those strikes, but is as yet untested in a court.

  17. The BBC says that this defence was already tested and failed “In 2014, two UK Supreme Court judgements stated airlines should have to pay out when a delay was caused by a technical fault, which appears to have happened in this instance with BA.”

    They are doing a Munoz, denying liability now but I suspect all we will hear tomorrow and for the next month is sorry, and that they are paying.

    BTW, that BBC article was online hours before this one so I am confused where you are getting your info for this article.

  18. They are probably declining compensation in the first instance as a number of passengers won’t take it to appeal. This happened to me with Ryanair, where the inbound flight was 3 hours delayed due to a ‘technical issue’. Took my claim to the Retail Ombudsman (free btw – http://www.theretailombudsman.org.uk) and Ryanair paid up within a few weeks.
    Also surprised at BA’s lack of contingency – surely allowing pax to rebook on Iberia / AerLingus and then claim a refund would have been easy?

  19. I sympathize with the travelers caught in this IT storm, but in all honestly I can’t blame British Airways for looking at all their options – plain and simple, they are just in a no-win business environment. The industry in general operates in an environment of intense competition, opaque pricing (the dollar sticker price vs. amenities, contract of carriage), potentially hostile unions, and a customer base that operates in an entitlement environment. How are they supposed to generate the cash flow to invest back into their creaking legacy IT infrastructure?

    FWIW, I don’t work in the industry but like to read about it.

  20. ADP – They make a huge profit, they could easily invest in their IT (and it probably would have cost them less than this).

    As to the claims people keep making about BA refusing to move passengers to other airlines, this was explained at the time as being because they couldn’t access the system to see who the passengers actually were. Maybe a lie, but it seems plausible. It certainly would have been cheaper than paying their hotel and food expenses plus compensation while they wait in many cases.

  21. Naww! Say it ain’t so! BA treating their customers like crap? Who would’ve thought?

  22. The industry’s profits swing wildly based oftentimes on factors outside their control – only with recent conditions has actual money been made to partially reinvest back into the business. A look at the 2016 annual report on iagshares.com highlights that they are actively reinvesting in their capital stock, at a greater rate than they have in the past.

    I still sympathize heavily with the affected travelers, especially those on transit without visas or visa-free entry – that must have been a particular hell.

  23. BA continues their long, slow down-grading of their product. I don’t understand. For those of us long time BA customers it’s tough to know when to jump off, but I think the time is near.

  24. Surprised that BA can respond to a claim so fast. I submitted numerous claims to LOT airlines and it takes days weeks to get a response…says up to 4 weeks on their auto response after submitting it.

  25. BA surely are reviewed for such potential occurancies. This is not an exceptional circumstance. Their contingency planning , if any , must be reviewed. And they can pay up the compensation.

  26. @Tony. As for when to jump off? As soon as possible if I were you. I am long term (now ex) BAEC Gold and gave up on them finally last year despite them having (through IAG) half the slots at heathrow. They are a shambles. I fly 250,000 km a year, so easyish to earn status elsewhere. Had to take a BA flight last month after nearly 12 months without one. Boy did it just reinforce that I’d made the right decision.

  27. I had to FIGHT for Over three months with customer service receiving assurances that “it’s coming” only to see nothing…I finally received my refund from an upgrade that I paid for while in business
    To upper deck (60seats) Business on 747
    Before they are bygone….
    Late arrival in Heathrow for a connecting flight on 747 due to Fog, which then resulted in a 777ER flight…
    BA must really be in a tight squeeze to quibble so long over a simple courtesy…
    I now avoid BA for any but the no other alternative flights…

  28. Can I have my credit card company simply “reverse the charge” of the cancelled BA flight?

  29. “Not pay EU261.” “Telling customers to ‘pound sand'”. *snigger

    Saw what you did there. *grins

  30. I used Airhelp.com when my wife’s flight from MUC-MAN was delayed and she arrived at her destination over 4 hours late. At first they said the runway was shut down for an emergency was the cause of the delay. Then it became a crew rest issue and they had to call in another crew. Once the new crew arrived, there was a maintenance issue with the plane. They finally realized that they weren’t going to fix the plane in time, so another plane was brought in. Then that plane had to be fueled and readied. All said and done, her flight was supposed to leave MUC @ 0850, but didn’t take off until around 1400. Yea, Airhelp took some of the money for doing the job, but it’s easier than dealing with the airline myself.

  31. I work for an airline, not BA, but a top-shelf Oneworld carrier – we would never pay compensation in case of that. This was absolutely unforeseen and completely out of BA’s control. People who want compensation for that are simply golddiggers.

  32. I’ve only had one experience with EU261. Granted it wasn’t BA nor UK courts system. Last year I flew Air Europa AMS – MAD – EZE and back same route.

    On the way back, when I arrived at Buenos Aires airport, it was chaos. Was eventually told its a 10 hour delay and given 2 vouchers for food. Vouchers were not accepted at the one restaurant specified because “plane too big, too many customers”.

    I arrived in AMS 14 hours late and made a claim to Air Europa under EU261 and was denied twice. They wrote me like a 3 page letter every time arguing that the flight was from Argentina and thus did not qualify (wrong as it was heading to Europe and my ticket was issued in Europe) and arguing the reason was out of their control (mechanical failure). They just keep denying any and all responsibility to pay under EU261.

    That’s only part of the reason why I see them as the worst airline in the world (that I’ve flown). Even worse than China Southern.

  33. It’s even more messier for the travel agencies and online booking sites that people purchased their tickets through. Airline representatives keep sending people back to the “travel agencies” and then it goes back and forth,and then there’s no other option except a chargeback,which for lot’s of travel agencies makes huge minuses. They pay the customer back the full ticket amount form their pocket while airline will keep the ticket money that was given via “check” or any other way. (talking about the cases when charges are done through tour operators or travel agencies not the airline itself – travel agents will know what i’m talking about).

  34. @Kacper
    “This was absolutely unforeseen and completely out of BA’s control.”

    So BA can’t control what computer systems it chooses to use, and can’t decide what power supplies and back up it needs?

    I hope you’re not helping any airline to try to resist EU compensation claims because with that argument you will be given very short shrift in an English court. But do please tell us which airline you work for, so we can all avoid it.

  35. Kacper you may not agree but it’s good customer service if you recognise the inconvenience and also compensate customers
    True there are golddiggers. A €200 ticket , 4 hr delay not much inconvenience to an individual no costs and €600 comp thank you very much
    But then you have people stranded several days having saved for years on the holiday of a lifetime, and their insurance doesn’t always cover consequential losses
    They will look at that airline and say ” well I was stressed and the service at the time was bad, but they compensated me immediately, no questions “.
    That money may even go back into buying new tickets with the same company
    Who would you fly with again ?
    Statistically , not everyone claims anyhow even if they have the right to do so

  36. I managed to get approved for my expenses, though I find it absurd they wouldn’t honor the actual cost of my expenses. A holiday in the UK plus a massive spike in hotel prices meant I paid 220 pounds for a hotel, and 75 for a cab.

    BA will only cover 200 and 50, and wouldn’t budge. Quite sad to be honest.

    But, I called the Customer RELATIONS line (you have to call customer service and ask to be transferred) and they approved the 250 within 20 minutes.

  37. Kyle, these caps are not legal. They have to pay for hotel and transfer there and back, full stop. Don’t put up with it.

  38. @Jakob

    We’re talking less than $50. It would take many, many phone calls to get the difference. It’s not worth the hours of my time fighting to do so.

  39. I had to purchase two new tickets to get home with another airline, so I’m out for the over 5K for the two first class tickets we couldn’t use.

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