IAG, British Airways’ owner, and easyJet still have hundreds of millions of pounds worth of unclaimed travel coupons. This is nearly three years after the airline was widely used to reimburse passengers for flights that were cancelled by the pandemic.
IAG, which is the owner of airlines such as BA, Iberia, and Aer Lingus reported last Friday more than EUR650mn in unclaimed vouchers. This was alongside the annual results for 2022 when the airline group made a profit for first time since the outbreak of coronavirus.
According to the company’s most recent results, EasyJet had PS111mn worth of unused vouchers on its balance sheets at September end. Rivals Ryanair, Wizz Air have yet to report full-year results.
These vouchers were issued to passengers who had their flights cancelled. They can then be used to book any future trip with the airlines.
Unclaimed vouchers are high because of their controversial use during pandemic. Major airlines encouraged passengers to accept vouchers instead of cash refunds when border restrictions first struck their operations. This led to cancellations in spring 2020.
Which? In 2020, Which? reported that passengers complained of difficulties getting through to BA to ask for cash refunds instead of vouchers.
Although easyJet passengers could request a refund online for cancelled flights, many prefer vouchers.
Robert Boyle, a former IAG senior executive and consultant, stated that the unexpected rush of compensation claims in 2020 was “extraordinary” and could have bankrupted all airlines if they had paid out to everyone.
He said that it was not common for airlines to include vouchers in their results and that there is no historical comparison to determine how many will be used.
It is going to be an upside. . . It could be quite large,” he stated.
Alexander Patterson, an analyst with Peel Hunt, stated that the unutilized vouchers were “less of a windfall” and “more of a liability” given that cash was received and customers could use them to fly.
The UK regulator, Civil Aviation Authority, criticized the industry’s initial response to the crisis. It also noted a backlog in refund claims for 2020. The regulator said that the process improved as airlines recovered from the crisis.
BA stated that it had “proactively contacted its customers to remind them of their vouchers”, with over 700,000. Redeemed by BA in 2022. The vouchers issued during the pandemic remain valid until September 2023.
EasyJet stated that the unused vouchers made up just 2% of its ticket revenue for 2019, which means “there is a very low proportion of customers who still have not used their vouchers”.
The airline added that the number of unused vouchers had fallen since September. This is especially important considering the busy booking period of the first two months of the calendar year, which is when the airline reports high travel demand.