British Airways chief executive Alex Cruz is stepping down, a month after Willie Walsh, former head of BA parent IAG. The two bosses annoyed many passengers. One last annoyance was a change last month to the BA Executive Club terms and conditions, allowing the airline to terminate the membership and cancel the rewards of anyone making “misleading statements” or engaging in conduct that “reflects unfavourably on the reputation of British Airways or any aspect of its business, brands, products or services”.
While this prompts thoughts of passengers having their cards cut up for tweeting “Run out of beef in business? #NoWayBA”, the airline insists action will be taken only for online abuse of staff. Sean Doyle, the incoming BA chief executive, will, if he has any sense, avoid aggravating loyal passengers further.
More interesting is another Cruz-era change to the Executive Club T&Cs. Effective from May 28, this requires BA members resident in the US and Canada to agree not to be part of any class action against the airline and to submit any dispute to compulsory arbitration, which has to be done individually and not as part of a group.
For North American passengers aggrieved after being pressed into accepting vouchers rather than cash refunds over flights cancelled because of Covid-19, for example, this is a blow. Because the cost and effort of going to court against an airline is so large and the recompense for losses, while annoying, is relatively low, suing an airline as an individual doesn’t seem worth it.
Class actions are different. There have been significant victories against airlines, with the compensation shared outside the US too. I benefited from a settlement reached with BA and Virgin Atlantic over their alleged collusion over fuel surcharges on tickets sold between 2004 and 2006. Sending the class action lawyers the flight numbers of our Virgin family trip to California yielded a modest cheque sufficient for an outing to a pizzeria.
There was a US class action against BA in 2018 brought by Executive Club members over a fuel surcharge on tickets for reward flights. But David Stellings, the lead lawyer in that case, which was settled with compensation for the members, points out that a 2011 US Supreme Court decision has encouraged many consumer companies to put agreements not to pursue class actions into their standard contracts.
The Supreme Court case involved AT&T mobile phones which were advertised as being free but on which customers had to pay sales tax. A class action ensued and, while the Californian courts said the standard form contract requiring individual arbitration was unconscionable, the Supreme Court found for AT&T and upheld the contract’s prohibition on class actions and arbitration.
BA’s provision against class actions applies only to Executive Club members, not all passengers, and there is a class action against the company under way in the US on behalf of customers demanding cash refunds. Some airlines have gone further than BA. American Airlines’ conditions of carriage say that any ticket buyer agrees to waive the right to class actions.
Tom Goodhead, a UK lawyer, believes blanket bans on group actions would be struck down in the UK and EU courts. He is involved in group actions against BA and easyJet over data breaches, and his firm, PGMBM, is looking into group actions against Ryanair and Air France-KLM over failures to pay compensation for cancelled flights.
Group litigation is growing in the UK, boosted by London-based US lawyers and by litigation funders. Some fret about the arrival of US compensation culture, but airlines should be more worried that the balance of power is about to tip in favour of their passengers.
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