US clips SAA’s wings in R5.4m penalty for delayed Covid refunds to passengers

Ground crew at work near an SAA plane on the tarmac at OR Tambo International Airport. File photo: Karen Sandison Independent Newspapers

Ground crew at work near an SAA plane on the tarmac at OR Tambo International Airport. File photo: Karen Sandison Independent Newspapers

Published Jun 5, 2024


SAA has agreed to pay the $300 000 (about R5.4 million) civil penalty imposed by the US Department of Transportation (US-DOT) to avoid protracted litigation over delayed refunds to passengers for cancelled flights during the Covid-19 pandemic.

This is as the US-DOT on Monday announced enforcement actions against SAA, Germany’s national carrier Lufthansa, and the Netherlands’ carrier KLM Royal Dutch Airlines, for extreme delays in providing more than $900 million in refunds owed to passengers due to flights cancelled or significantly changed in response to the impact of the pandemic.

SAA was sanctioned to pay $15.2m (R283m) in required refunds and $300 000 in civil penalties.

Lufthansa was sanctioned $775m in required refunds paid and a $1.1m penalty, while KLM was fined $113.3m in required refunds paid and a $1.1m penalty.

In a statement yesterday, SAA said it had accepted the settled imposition of a civil penalty of $300 000 from the original penalty claim amount, in order to void protracted litigation.

The penalty will be paid to the US Treasury in tranches over 540 days of the issuance date of the consent order.

The airline said that between April 2021 and March 2023, it had paid about R2.2 billion in Covid-19 period unflown tickets refunds as it cancelled or significantly changed the flights due to the impact of the Covid-19 pandemic.

“We are pleased that this matter has now been finalised. The intention of the parties was always to find an amicable way of closing this case,” said Koekie Mbeki, SAA’s chief legal counsel.

“We look forward to normalising relations with our customers in the US and welcoming them aboard SAA when we resume flights to the Americas in the future.”

SAA said it had continuously pleaded its case with the US-DOT that despite going into business rescue in December 2019 and being hit by the impact of the pandemic, it had taken “extraordinary steps during 2019–2022 to process refunds for passengers whose flights were cancelled or significantly delayed by the airline, not only in the USA but throughout SAA’s markets”.

The US-DOT said the enforcement actions were part of ongoing work to ensure passengers are treated fairly by airlines, which has already resulted in the largest airline fines in the department’s history and nearly $4bn returned to passengers in refunds and reimbursements.

“When a flight is cancelled or significantly changed, you shouldn’t have to fight with the airline to get their money back – and we’re holding airlines accountable when they fail to give passengers the refunds that they’re owed,” said US Transportation Secretary Pete Buttigieg.

“We are using all of our tools to improve air travel for everyone.”

In addition to the more than $900m in refunds that airlines have paid back, the US-DOT said it was assessing a total of $2.5m in civil penalties against three airlines for extreme delays in providing refunds.

The US-DOT in May announced two final rules requiring airlines to provide automatic cash refunds to passengers when owed and to protect consumers from costly surprise airline fees.

“These rules will significantly expand consumer protections in air travel, provide passengers an easier pathway to refunds when owed, and save consumers more than half a billion dollars every year in hidden and surprise junk fees,” Buttigieg said.