PRESS RELEASE

Issued: May 18, 2000

Court Victory for

Association of British Travel Agents (ABTA)

ABTAs significant court victory against UK airlines has been upheld. The Court of Appeal has dismissed an appeal by three UK airlines (British Airways, Virgin Atlantic and Lufthansa) against the decision of the High Court in November 1999, which held that the airlines had attempted to mislead their customers and required them to pay commission to travel agents in respect of Passenger Service Charge (PSC).

In April 1999 the airlines, led by British Airways, removed the PSC element from the airfare and placed it on air tickets in the box reserved for taxes despite the fact that PSC is not a tax nor even public in nature. The airlines claimed that this was to increase transparency for the customer, although at the same time many fares were increased by an amount similar to PSC.

The Trial Judge, Mr Justice Timothy Walker, held that this "was a way of increasing the airfare to the passenger, but implying that the increase had come from the Government or the airports, but not from the airlines."

In delivering judgement to the Court of Appeal, Lord Justice Sedley, in relation to the standard, airline biased contract between airlines and their agents, stated: "{the airlines} sought to use their controlling position in order to require travel agents to mislead the public."

Lord Justice Clarke, delivering the main judgement of the Court of Appeal, dismissed all of the issues raised by the airlines. He granted a Declaration to the effect that airlines are not entitled to give instructions to travel agents that

would mislead customers. He also required that airlines pay commission to travel agents on the PSC element of the airfare, backdated to April 1999. This is likely to result in airlines having to reimburse travel agents between £20m - £50m.

"This is a fantastic result for customers and travel agents alike", said Riccardo Nardi, Head of ABTAs Legal Services. "The Association is determined that airlines should treat their customers and agents fairly and calls upon them to act honourably and reincorporate PSC into the airfare in order to avoid further damage to their reputations and possible further legal action."

ABTA has already begun a large-scale recovery process on behalf of its Members - in order to pursue all airlines currently breaking out PSC - using a centralised mechanism with a Management Committee operating the claims on behalf of individual claimants.

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Notes to Editors:

• Legal publications seeking more details on the case - or interview opportunities with ABTAs Legal Team - will be given every assistance. In the first instance, please contact the Press Office
  
• Passenger Service Charge (PSC) is a commercial charge levied by airports on airlines for the use of terminal facilities by passengers. It has been part of airline overhead costs since the early 1970s
  
• Around 70 scheduled airlines are currently showing PSC separately on the tickets given to their customers

• ABTAs court case was taken against British Airways (who led the separation of UK PSC), Virgin Atlantic Airways and Lufthansa as a representative (in the non-legal sense) group of airlines. The Judgement and subsequent Court of Appeal result has implications for all airlines and millions of customers
  
• The Association of British Travel Agents (ABTA) represents over 2,300 travel agents and tour operators. Its Members sell over 90 percent of the overseas holidays bought in the UK

May 18, 2000

Further information: Jackie Gibson or Sean Tipton (ABTA Press Office)

Tel: 020 7307 1900 (office hours)