Ryanair succumbs to CAA demands for clarification on cancellations

Irish budget airline Ryanair has agreed to comply with demands made by regulators to inform customers of their full compensation rights after it cancelled thousands of flights in recent weeks.

Less than an hour before the Friday deadline set by the UK Civil Aviation Authority to tell those affected passengers that they were entitled to be re-routed via other airlines, Ryanair finally caved into the demands.

The carrier, which on Wednesday cancelled a further 18,000 flights on top of the hundreds of thousands axed a week earlier, said it had emailed the thousands of people affected by the cancellations informing them of their options, while it has also updated its terms and conditions on its website.

Under EU261 obligations, airlines must book alternative flights for passengers who suffer from cancellations, even if they are through a rival carrier.

The CAA accused Ryanair of not complying with the law over its handling of the cancellations, which were caused by an error in the rostering of its pilots.

Ryanair spokesperson Kenny Jacobs said on Friday the airline would take on extra staff in order to deal with the fallout of the cancellations.

“We have taken on extra customer service staff and are moving now to process and expedite all EU261 claims from affected customers. We are committed to processing all such claims within 21 days of receipt and hope to have all such claims settled before the end of October,” Jacobs said.

Over 700,000 passengers have had their travel plans disrupted by the series of flight withdrawals, with a second announcement this week informing that several established routes had been removed between October and March 2018.

Ryanair shares fell to €15.95 om Friday afternoon as the deadline neared before rallying on the news this afternoon to €16.35 and closing at €16.24.

"Avoiding a protracted spat with the CAA is probably a wise move as it became clear the regulator was prepared to push this a lot further," said analyst Neil Wilson at ETX Capital, noting that the shares remain down more than 4% or so since the first cancellation announcement and about 9% lower since the Mons ruling where Ryanair lost a court battle in the European Court of Justice over cabin crew's workplace rights.

Wilson said that while customers were bearing the brunt of this cancelled flights fiasco, investors are just as worried about rising labour costs affecting Ryanair’s low cost model.

"Acquiescing to the regulator carries higher upfront costs but this was clearly a necessary step to avoid a protracted battle, potentially big fines and worse reputational damage.

"As ever with Ryanair it was not a vanilla admission of guilt with a not-too-subtle dig at the regulator’s treatment of British Airways included for good measure. More turbulence is expected.”