Passengers queue to check in at Heathrow Airport in London, on November 29, 2021. AP
Passengers queue to check in at Heathrow Airport in London, on November 29, 2021. AP
Passengers queue to check in at Heathrow Airport in London, on November 29, 2021. AP
Passengers queue to check in at Heathrow Airport in London, on November 29, 2021. AP

More UK passengers to be eligible for flight delay payouts under new plan


Soraya Ebrahimi
  • English
  • Arabic

More passengers will receive compensation for delayed domestic flights under plans announced by Transport Secretary Grant Shapps.

The Cabinet minister is proposing to make travellers entitled to payouts for flights in the UK that arrive at their destination more than an hour late.

The UK uses the EU’s 261 rule, which means passengers on flights shorter than 1,500 kilometres can claim £220 ($295) for delays of more than three hours, but nothing for shorter hold-ups.

Now, the government is considering replacing this system with a model similar to the one used by rail and ferry operators, which links compensation to the cost of travel.

Under the Department for Transport’s plan, which is under consultation, passengers would be entitled to:

– 25 per cent of the ticket prize for a delay of more than one hour but less than two hours;

– 50 per cent of the ticket price for a delay of more than two hours but less than three hours;

– the full ticket price for a delay of more than three hours.

The department did not specify which categories delays of exactly two and three hours would fall into.

Airlines avoid paying compensation for disruption caused by events outside their control, such as extreme weather, security alerts and restricted air traffic control operations.

Other proposals to protect passengers’ rights include making it mandatory for airlines operating in the UK to sign up to an alternative dispute resolution scheme, which could help more people to receive the refunds and compensation to which they are entitled.

The resolution programmes have helped thousands of passengers to intensify complaints without going to court, but membership by carriers is voluntary.

The government is also considering giving the Civil Aviation Authority more power to enforce consumer laws by directly fining airlines for breaches.

“People deserve a service that puts passengers first when things go wrong, so today I’ve launched proposals which aim to bolster airline consumer protections and rights," Mr Shapps said.

“We’re making the most of our Brexit dividend with our new freedoms outside of the EU, and this review will help build a trustworthy, reputable sector.”

Tim Alderslade, chief executive of industry body Airlines UK, said carriers “work hard to ensure that the passenger experience is as smooth and enjoyable as possible”.

Mr Alderslade's organisation will respond to the consultation.

CAA chief executive Richard Moriarty said the plans were a “clear indication of the need to enhance our enforcement powers, and bring us in line with other regulators”.

“The proposals will improve passenger rights and equip the Civil Aviation Authority with the appropriate tools to act swiftly and effectively for the benefit of consumers,” Mr Moriarty said.

Rocio Concha, director of policy and advocacy at consumer group Which?, said trust in travel companies “plummeted” when the coronavirus pandemic began, as some airlines “ignored their legal obligations and refused to pay refunds for cancelled flights”.

“This consultation is a welcome first step that must improve and strengthen consumer rights and protection so that complaints are dealt with fairly and promptly, and that passengers receive the money they are due quickly and without unnecessary hassle," Ms Concha said.

“It is also vital that the system is backed up by a regulator with the powers it needs to take swift and strong action against any company that breaks consumer law.”

Mr Shapps is also proposing to require airlines to pay the full cost of repairing or replacing wheelchairs and mobility scooters lost or damaged during domestic flights.

They are only obliged to pay passengers up to about £1,200 for damage to or loss of their belongings under the terms of the Montreal Convention, even though some wheelchairs cost more than £25,000 ($33,000).

Caroline Stickland, chief operating officer of disability group Transport for All, said preventing someone from using their wheelchair “can mean a total loss of independence”.

“Much more needs to be done to safeguard against this, including fair recourse to compensation for disabled passengers," Ms Stickland said.

“We welcome these proposals and hope they mark the start of further positive changes in this area.”

Mountain%20Boy
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THE BIO

Favourite place to go to in the UAE: The desert sand dunes, just after some rain

Who inspires you: Anybody with new and smart ideas, challenging questions, an open mind and a positive attitude

Where would you like to retire: Most probably in my home country, Hungary, but with frequent returns to the UAE

Favorite book: A book by Transilvanian author, Albert Wass, entitled ‘Sword and Reap’ (Kard es Kasza) - not really known internationally

Favourite subjects in school: Mathematics and science

SPEC%20SHEET%3A%20SAMSUNG%20GALAXY%20Z%20FLIP%204
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

How will Gen Alpha invest?

Mark Chahwan, co-founder and chief executive of robo-advisory firm Sarwa, forecasts that Generation Alpha (born between 2010 and 2024) will start investing in their teenage years and therefore benefit from compound interest.

“Technology and education should be the main drivers to make this happen, whether it’s investing in a few clicks or their schools/parents stepping up their personal finance education skills,” he adds.

Mr Chahwan says younger generations have a higher capacity to take on risk, but for some their appetite can be more cautious because they are investing for the first time. “Schools still do not teach personal finance and stock market investing, so a lot of the learning journey can feel daunting and intimidating,” he says.

He advises millennials to not always start with an aggressive portfolio even if they can afford to take risks. “We always advise to work your way up to your risk capacity, that way you experience volatility and get used to it. Given the higher risk capacity for the younger generations, stocks are a favourite,” says Mr Chahwan.

Highlighting the role technology has played in encouraging millennials and Gen Z to invest, he says: “They were often excluded, but with lower account minimums ... a customer with $1,000 [Dh3,672] in their account has their money working for them just as hard as the portfolio of a high get-worth individual.”

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Innovator Founder Visa is aimed at those who can demonstrate relevant experience in business and sufficient investment funds to set up and scale up a new business in the UK. It offers permanent residence after three years.

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Investing or establishing a business in Germany offers you a residence permit, which eventually leads to citizenship. The investment must meet an economic need and you have to have lived in Germany for five years to become a citizen.

Italy
The scheme is designed for foreign investors committed to making a significant contribution to the economy. Requires a minimum investment of €250,000 which can rise to €2 million.

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Residence Programme offers residence to applicants and their families through economic contributions. The applicant must agree to pay an annual lump sum in tax.

Canada
Start-Up Visa Programme allows foreign entrepreneurs the opportunity to create a business in Canada and apply for permanent residence. 

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Updated: January 31, 2022, 12:01 AM