SAA fined for R5.6m over delayed refunds to passengers

The US Department of Transportation (USDOT) announced this week that SAA is fined R5.6 million for delays in refunding passengers over disrupted flights. BusinessLive, via Reuters, reports that the national carrier is not the only airline to fall foul of the USDOT. On Monday (3 June 2024) it imposed a total of $2.5 million (roughly R46 million) in civil penalties against SAA, Lufthansa and Air France unit KLM Royal Dutch Airways.

SAA IS FINED R5.6 MILLION

According to Simple Flying, SAA is fined R5.6 million ($300 000) versus the other airlines who were each fined upwards of $1.1 million (an equivalent of R20 million). These civil penalties, said USDOT, were for significant delays in providing refunds for passengers affected by the COVID-19 pandemic. The report states more than $900 million in refunds are owed to passengers from these airlines due to disrupted COVID-19 flights. Monies they have been waiting for for years.

South African Airways (SAA) poses an interesting challenge for USDOT because of the following reasons. 400 complaints have been received about failure to make timely refunds. However, during the pandemic, the airline was on the verge of being liquidated before it entered bankruptcy protection. After 2020, its finances only worsened as the pandemic restricted air travel and depleted its already minimal cash flow, explained the report. The airline is expected to release a statement on resolution to the delayed refunds this week.

WORLDWIDE PROBLEM

Moreover, $1.1 million in penalties has been imposed on KLM and Lufthansa. However, each carrier was credited $550 000 for refunds for non-refundable tickets on US flights. In 2022, USDOT said it had completed ten airline investigations into delayed pandemic passenger refunds and that more were pending. Most refund requests from Lufthansa passengers on US-bound flights were taking longer than 100 days to process.

Lufthansa said in a statement it had made all required refunds and the delay in payments was solely due to the historically unprecedented level of refunds originating from the pandemic. And being inundated with refund requests put the German airline at risk of insolvency. Between March 2020 and September 2022, it provided more than $5.3 billion in refunds.

Meanwhile, KLM says it has adopted a customer-friendly ticket refund and exchange policy. And it has provided $84 million in refunds to customers on US flights, even to those who were not entitled to refunds at all because of non-refundable tickets.