ICAGY International Consolidated Airlines Group SA (PK)

--CMA says it will investigate BA and Ryanair over refunds when it was unlawful to travel for nonessential reasons in one or more parts of the U.K. during the pandemic

--Ryanair says it has repaid a small number of people having reviewed the specifics of their cases

--BA says the U.K. government is punishing the airline industry

By Anthony O. Goriainoff

The U.K.'s Competition and Markets Authority said Wednesday that it has opened an investigation to determine whether British Airways and Ryanair Holdings PLC had broken consumer law by failing to offer refunds for flights customers couldn't legally take during the pandemic.

The move by the regulator prompted British Airways--a part of conglomerate International Consolidated Airlines Group SA--to accuse the government of seeking "to punish further an industry that is on its knees." BA said it had issued well over three million refunds and helped millions of customers change their travel dates or destinations.

"Any action taken against our industry will only serve to destabilize it, with potential consequences for jobs, business, connectivity and the U.K. economy," British Airways said.

The CMA said that during lockdown periods stemming from the pandemic in the U.K. British Airways and Ryanair didn't give monetary refunds to people unable to legally fly. It said that BA offered vouchers or rebookings, while Ryanair offered rebookings.

Ryanair said it welcomed the CMA's update on its review of airline policies on refund requests. "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 U.K. customers have availed of this option," the airline said.

The regulator said it opened an investigation into the airline sector in December after reports that consumers were being denied refunds for flights they couldn't legally take.

The CMA said it is concerned that by failing to offer customers their money back, the two companies may have breached consumer law. It said that is seeking to resolve these issues with both operators, and that this may include seeking refunds or other forms of redress for those people affected.

The regulator said both carriers have the opportunity to respond to its detailed concerns.

"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," CMA Chief Executive Andrea Coscelli said.

IAG shares in London at 0735 GMT were up 4.23 pence, or 2.2%, at 202.45 pence. Ryanair's London-listed shares were up 0.17 euro cents, or 1.1%, at EUR16.70.

Write to Anthony O. Goriainoff at anthony.orunagoriainoff@dowjones.com

(END) Dow Jones Newswires

June 09, 2021 04:18 ET (08:18 GMT)

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