Is Ben Marlow normally this ignorant?

The elephant in the room is how customer deposits are used to fund day-to-day operations. It wasn’t just that the major carriers didn’t want to provide refunds, it is that they would have struggled to return the cash because much of it had already been spent. Some even admitted that a flood of payouts risked tipping them over the edge.

There’s no denying that the pandemic sent the airline industry into a tailspin but it’s not for consumers to prop up struggling businesses.

Imagine the uproar if a high street bank had refused customers access to their savings during the financial crisis. It might happen in failed socialist regimes or dictatorships but even then people would take to the streets. Besides, you can’t plead for special treatment if you’re not prepared to do the right thing by customers.

Because that’s exactly how banks always operate. Your money isn’t there in the vault for you to collect it. It’s in Mrs. Miggin’s, down the road, mortgage.

Which is why we have central bank support for fractional reserve banks, see?

17 thoughts on “Is Ben Marlow normally this ignorant?”

  1. And people did indeed take to the streets of Newcastle demanding their Northern Rock money, and Hong Kong demanding their BCCI money, and their cutlery sets, and cakes.

  2. Judging by some of the videos I see about Nazi staff on US airlines, the collapse of the industry cannot be imminent enough.

  3. Spin. Authority dropped the investigation because there’s no case to answer.

    Every sympathy with those, myself included, unable to travel. But these are flights that did operate, not those cancelled, and we were prevented from flying by government intervention, not airline action. It’s difficult to see why that means the _airline_ should stump up for a refund. Most have been pretty good in offering a credit against future travel.

  4. The elephant in the room is how customer deposits are used to fund day-to-day operations. It wasn’t just that the major carriers didn’t want to provide refunds, it is that they would have struggled to return the cash because much of it had already been spent.

    Imagine thinking that this was unusual; that businesses should and do operate by keeping aside nearly all their income in case they need to refund it to customers. Fucking hell.

  5. Bloke in North Korea (Germany province)

    “But these are flights that did operate, not those cancelled…”

    Not remotely true. I ended up having to sue Lufthansa to get my money back for ~6 trips that _they_ cancelled. Early in the pandemic air travel was cut to almost nothing*. They didn’t want to pay up even after getting the taxpayer bailout.

    *: And I don’t know what persuades people to subject themselves to the indignity of it today. I’ll be back in the air once the tests, masks, quarantines, social credit passports etc are gone. So could be some time.

    “Imagine thinking that this was unusual; that businesses should and do operate by keeping aside nearly all their income in case they need to refund it to customers.”

    Yeah, but this is the “flying is really speshul i do it once a year” crowd, not understanding that their £89 return ticket to Venice is the bargain basement and comes with (a) you accepting some risk of the supplier going under (b) you pay up front months ahead, (c) no flexibility etc.

  6. And I don’t know what persuades people to subject themselves to the indignity of it today. I’ll be back in the air once the tests, masks, quarantines, social credit passports etc are gone. So could be some time.

    It’s a simple trade off. My aged, widowed mother has been to visit my sister in Greece twice since May. It’s a hassle, but compared to being at home with little contact with friends etc it’s nothing. I, on the other hand, see no benefit in flying until some normality returns, or next January when I’m going skiing, whichever is first.

  7. We’ll be off for some Canarian sun in a couple of weeks. I booked it months ago on the basis that it would probably be all over bar the shouting by October. That hasn’t quite worked out – we’ll still have to mask up on the flights and mask rules in Spain appear to be quite strict. However all the other hassle is mostly gone except for a couple of extra forms and, hopefully, now only a lateral flow test when we get back. For me the tradeoff for some quiet time in a nice & warm part of the world is worth it.

  8. “some quiet time in a nice & warm part of the world”: yup, and with some local geothermal warming in addition.

  9. TG

    Yep, mask etc stuff in Spain is the same as in France (basically, if you’re moving inside a building to which the public has access wear a mask). But at least Macron’s Covid passports are not required.

  10. Notable about Spain is the numbers still wearing masks in the street, despite not being required. Around 25% from a quick survey from the terrace. Beginning to wonder if this might have become a permanency, the level of fear the government has managed to instil.

  11. @Dearieme The little spout at Las Palmas would make for a hell of a tourist attraction if the kneejerkers and pantywetters wouldn’t be all up in arms about it.

    It’s a lovely flowing volcano. Almost textbook/NatGeo level. Not bloody Vesuvius. Mostly Harmless.

  12. Yep. Standard hotspot volcano like Hawaii, and that one has come alive again too. We’re on the next island over so no nasty ash or smells (Trade winds blow the other way). Might get a view from the flight though.

  13. “Imagine the uproar if a high street bank had refused customers access to their savings during the financial crisis. It might happen in failed socialist regimes or dictatorships but even then people would take to the streets. Besides, you can’t plead for special treatment if you’re not prepared to do the right thing by customers.”

    Is it not the case that the financial authorities have effectively said that in a re-run of the GFC there will be no bank bailout and depositors above the FSCS guarantee will face a haircut?

  14. Banking is a very poor comparison, since the whole point of taking deposits is to invest them to generate interest.

    However, there is a genuiine point here. Airlines should not be using prepayments to finance their operations. That’s what working capital is for. Any prepayment is solely to pay for a service, so if that service cannot be provided, the payment should be returned. This means that if at any time an airline does not have enough assets to cover repayment of all prepayments, a case could be made that it is trading while insolvent – an offence in many jurisdictions.

  15. Charles has an awesome solution. We make all airline flights more expensive by ensuring the companies have to hold masses of cash.

    All in the event the unpredictable happens. Which, by its nature is unpredictable. So will have a different problem next time.

    Which we will “solve” by yet more regulation.

  16. we were prevented from flying by government intervention, not airline action. It’s difficult to see why that means the *airline* should stump up for a refund.

    Alternately, I’ve paid for a service which has not been delivered, therefore I need to be restored to the position I was before, i.e. money refunded in full in cash. If the airline wants to avoid going bust and wants me to take vouchers / future flight credit then that is a negotiation I might enter into, but I’d need to be offered something whose retail value (as opposed to cost to the airline) was significantly higher than that cash in my bank account. Risk adjusted returns and all that jazz.

    If the airlines decide to sue the government or claim on insurance for the chaos caused by government idiocy over lockdowns and the like then that is a separate matter for them.

    As with that volcano in Iceland erupting from a few years ago, widespread cancellation of flights by government / aviation safety agencies for whatever spurious reason is rare, but hardly a black swan event and airlines need to cover insurance and other forms of remediation themselves as part of their standard operating costs.

    “Screwing customers because they can” is completely unacceptable.

    Filing an N1 form in the small claims track of the County Court is often the only way to get some of these buggers to do the right thing. Been there, done that.

Leave a Reply

Your email address will not be published. Required fields are marked *