Ryanair Finds a Novel Way to Cut Costs on Passenger Compensation Claims

A new study by the U.K-based consumer rights group Which? reveals that Ryanair’s decision to withdraw from a binding arbitration program has saved the company millions of dollars in both passenger compensation payments and fees associated with fighting the claims. Meanwhile, passengers have been left with a much more difficult path to recovering owed compensation.

Ryanair has found a novel way to avoid paying passenger compensation claims. Rather than fighting the validity of the claims, the Dublin-based carrier has instead reportedly decided to make filing the claims much more tedious in the first place. According to a new report, the technique has saved the company from paying out millions of dollars in rightfully owed passenger compensation claims.

The U.K. consumer protection group Which? reveals that when the budget carrier abruptly left the Civil Aviation Authority (CAA)-approved arbitration program, Aviation ADR, in November of 2018, the number of disputes filed by passengers dropped from 14,000 in the previous eleven months to just 553 over the next four months. Aviation ADR ordered the company to pay more than $3 million to passengers when the organization oversaw compensation disputes. Since Ryanair left the program, passengers can now only file complaints directly with the CAA.

According to the Which? study, the airline not only saved more than $150 in administrative fees for each claim it was ordered to pay under the arbitration scheme, but the more complicated dispute resolution scheme in place now has also discouraged passengers from pursuing claims. The end result being that the airline has saved a “fortune.” The airline was also effectively released from any claims filed with arbiters after the company opted to leave the system.

“When the airline left the scheme in November 2018, the arbitrator rejected 854 complaints that it says arrived after that date and told those passengers to contact the Civil Aviation Authority (CAA),” the Which? study’s authors explained. “Only 87 passengers did this in the last month of 2018 and just 466 passengers in total complained to the CAA in the first quarter of 2019. This is despite the fact that, as Ryanair confirmed to us, there has been no ‘drop off’ in the number of claims since it left Aviation ADR.”

For its part, Ryanair says it has a policy of paying all valid claims within “an industry-leading ten days of receipt.” Despite this claim, the CAA announced shortly after the carrier left the binding arbitration agreement that the agency would begin enforcement action against the airline for denying valid compensation claims.