Thursday, 31 March 2011

O'Leary's liability surcharge: Sensible intent.

Ryan Air's imposition of a £ 2 surcharge on its fares to cover liability for factors beyond its control is a sensible one. Criticism from FlyBE and others including deriding it as in reality a fuel surcharge is misplaced especially as it is part of a campaign Europe's airlines in particular should applaud.

The notion that airlines should be responsible for getting their booked passengers from A to B with no delays completely regardless of circumstances is absurd. Originally the law was brought in to dissuade airlines from overscheduling or cancelling flights simply because the loads were low and they would avoid a loss by not operating. The legislation was loosely worded and as result allowed governments to claim that any significant delay or cancellation could be claimed for.Hence even when the problem is caused by rear-end covering government action as was the case in with grounding of flights during the volcanic ash episode, the carrier was held to be liable? Why should it be? The cause of the cancellations in that case was the government authorities refusing to allow aircraft to take off, not the airlines unwillingness or inability to do so. If there were any question of who was responsible for the inability of the airlines to fulfil their contracts it was simply the governments and if they felt that any compensation was due to passengers in a normally logical world they could have paid it themselves and their uninvolved taxpayers taken the hit. Better still they could have explained that events and actions which are not the fault of anybody do happen and in these cases no compensation is due to anybody as it is up to the user of the service to take out their own insurance if they see fit,-or take the risk.

The same is true in any weather disruption. If conditions are below national or company limits there should be no pressure on anybody to operate. Indeed any such pressure is obviously unsafe. The time element in a contract of carriage should be suspended and any compensation should be a matter between the passenger and their insurer. If uninsured they have taken the concious decision to take the risk themselves and on most occasions they will save money by so doing.

There are two problems here. The first is the lawyer-encouraged culture of "somebody (else) must be responsible for everything" and therefore a payment attatches to any non or delayed performance and secondly that this can be achieved at no cost to anyone other than the contractor who will cheerfuly say "fair cop" and absorb it. The simple fact is that if a business is forced to periodically make payments for things it can not prevent it will have to build the cost into what it charges the customer in the first place.

Congratulations therefore to Mr O'Leary for very simply expressing the facts of life. If the governments,-who no way are going to pay,-and customers want to be able to claim for uncontrollable flight disruptions they will simply have to pay an insurance fee up front.This could be hidden in fare rises, fuel surcharges or any other way, but RyanAir have simply been entirely open about it. The industry should applaud, not scorn, especially as by this action O'Leary opens the way to debating and hopefully getting rid of this absurd bit of law to the benefit of all concerned. Insurance can then revert to being a matter between insurer and potential purchaser,-as it always should have been.Airlines have already been forced by Air Passenger Duty to become tax collectors. They could do without having to be insurers as well.

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