Finnair A350
Multiple Finnair customers are now up to $13,000 out of pocket after requesting EU261 compensation for flight delays. Photo: John H. from Pixabay.

Multiple Finnair passengers have been left up to AU$13,000 each out of pocket, through no fault of their own, after they tried to claim EU261 compensation for flights delayed due to mechanical faults.

In the European Union, airlines are legally required to compensate passengers for flights delayed by more than 3 hours, except in extraordinary circumstances. But after Finnair initially refused to provide compensation, these passengers took their cases to one of the many third-party claim agencies operating in Europe.

Tens of thousands of people have used claim agencies to seek compensation from airlines in the European Union. These agencies advertise a “no-win, no-fee” policy where they’ll take a cut of any payout received from the airline, but there is no risk to the client.

Unfortunately, things don’t always go to plan and numerous Finnair passengers have now been left personally owing the Finnish airline debts in the thousands of dollars. As this cautionary tale demonstrates, you can’t always take claims like “risk-free” at face value.

The European Union’s Flight Compensation Regulation

In the European Union, airlines are required to pay legally mandated amounts of compensation to passengers when flights are significantly delayed, cancelled at short notice or boarding is denied due to overbooking.

This regulation, known as EC261/2004 (and sometimes referred to as EU261) was introduced in 2004 to provide basic protections to airline passengers, as well as incentivising airlines to improve their operational reliability and to stop routinely overselling flights.

Under the EU261 regulation, airlines are liable to pay passengers €600 (approximately AUD950) in compensation for long-haul flights (defined as over 3,500km in distance) that are delayed by more than four hours. Different compensation amounts and criteria apply to short-haul flights. The EU261 rules apply to all flights departing from the European Union, as well as flights to the European Union that are operated by European carriers.

But airlines do not have to pay EU261 compensation if a delay or cancellation was caused by an “extraordinary event” beyond the airline’s control. For example, this would include delays caused by poor weather, natural disasters, third-party disruptions (like an air traffic controllers strike) or bird strikes.

Teething problems with Finnair’s new Airbus A350s

Finnair was the launch customer for the Airbus A350, receiving their first brand new A350 in October 2015. At the time, the modern new aircraft featured heavily in Finnair’s marketing. Unfortunately, there were some teething mechanical issues which affected the Airbus A350’s reliability in the months after it entered service.

On 5 January 2016, the Australian Frequent Flyer member nicnet was travelling on Finnair flight AY58 from Shanghai to Helsinki with five other people. The flight was delayed by around six hours due to an earlier mechanical fault with the Airbus A350’s brakes.

Two months later, another AFF member whose online handle is SandyS, was travelling with her husband in Finnair Business Class from Amsterdam to Bangkok via Helsinki. Her A350 flight from Helsinki to Bangkok was delayed overnight. This caused SandyS to miss her onward flight from Bangkok back to Australia, which was booked on another ticket with Qantas.

Although SandyS had factored in some extra time in Bangkok in case the inbound flight was delayed, she hadn’t allowed for a delay of more than 20 hours. Her travel insurance wouldn’t cover the extra $350 she had to pay to rebook her Qantas flight. She also forfeited the 80,000 Qantas points she had paid for a points upgrade to Business Class on her original Bangkok-Sydney flight with Qantas, and ended up flying in Economy on the new Qantas flight.

SandyS posted about her experience at the time on the Australian Frequent Flyer forum.

Affected passengers try to claim compensation for Finnair delays

When their flights were delayed, Finnair did meet its legal obligation of handing out information about passengers’ rights to compensation under regulation EC261/2004.

But when nicnet, SandyS and others affected by similar Finnair delays tried to claim compensation, Finnair refused their requests. Instead, the airline offered vouchers worth a lot less than the amount that would be owed to the passengers under the EU261 regulation.

Finnair told these passengers:

The aircraft was new and this failure could not have been avoided by any possible maintenance action. We suspect a manufacturing defect… a manufacturing defect is considered an extraordinary circumstance.

Unsatisfied with this response, nicnet contacted the Finnish consumer authority. Almost two years later, the Finnish consumer ombudsman finally advised that it considered Finnair was liable to pay EU261 compensation.

However, similar to the Airline Customer Advocate in Australia, the Finnish consumer ombudsman has no power and their recommendation was not legally enforceable. Finnair still refused to budge, leading the Finnish Consumer Disputes Board in 2018 to blacklist the airline.

Passengers contact IfDelayed, a claim agency

In the meantime, affected passengers including nicnet, SandyS and at least one other Australian couple had contacted IfDelayed, a third-party EU261 claim agency based in Sweden.

IfDelayed is just one of many claim agencies that were born in the years after the EU261 regulation came into force. It had become so common for airlines to avoid paying compensation, using every trick in the book, that these agencies saw a business opportunity. They would fight for compensation on behalf airline customers who lacked the time or expertise to do it themselves.

If the airline paid out the compensation owing, the claim agency would keep a portion of this. With IfDelayed, the commission is 30%. But if they were unsuccessful, there would be no cost to the client. In fact, IfDelayed still advertises a “risk-free no win – no fee” policy on its website.

IfDelayed website screenshot
IfDelayed, like most EU261 claim agencies, advertises a “risk-free” guarantee on its website.

With Finnair refusing to pay compensation, IfDelayed requested permission to take the airline to court in Finland on behalf of the affected passengers. The clients agreed, but only on the basis that they would not be liable for any costs.

The terms of service that the clients agreed to with IfDelayed included the following clause:

Under no circumstances will you be liable to pay any costs or other penalties if we do not win your case.

SandyS told Australian Frequent Flyer in an interview on the latest episode of the “AFF on Air” podcast that she would never have agreed to pursue further legal action if she thought she might be personally liable for any legal costs.

“I agreed to that, but only the understanding that there would be no cost to us – we wouldn’t be liable for any legal costs, nothing like that. I would never have gone down that road without that promise,” she said.

IfDelayed subsequently filed a lawsuit in the Finnish court against Finnair in December 2018. That was the last time the clients received an update from IfDelayed.

Passengers then told they owe Finnair thousands

By the second half of 2020, the COVID-19 pandemic had come along and many of the Finnair passengers involved had forgotten about the whole thing. So they were shocked to receive emails out of the blue from an unrelated Finnish law firm, advising them that the court case had been lost and that they were now personally liable to pay Finnair’s legal costs because IfDelayed had gone bankrupt.

“I thought it was some elaborate scam, to be honest. It was bizarre. But as it turns out, it wasn’t,” SandyS said.

You can read a copy of the email posted by SandyS in October 2020 in the relevant thread on the Australian Frequent Flyer forum: Finnair Fiasco from 2016

Unbeknownst to the affected passengers, the court case had taken place in February 2020. The judge sided with Finnair that the mechanical issues were an extraordinary circumstance and Lakitoimisto KPF, a Finnish legal firm that had been contracted by IfDelayed, lost the case. This was despite the advice of the Finnish consumer ombudsman and precedents relating to mechanical delays set by courts in other European Union countries. The judge ordered IfDelayed to pay Finnair’s legal costs.

IfDelayed’s bankruptcy

Coincidentally, on 4 May 2020, IfDelayed filed for bankruptcy. It had not yet paid Finnair’s legal costs, and it seems Finnair was either unable or unwilling to recover these costs from the estate of IfDelayed after its bankruptcy. So the airline decided to recover its legal costs directly from IfDelayed’s clients instead, which it appears they were legally entitled to do.

On 16 June 2020, a large Swedish insurance company called Insurello acquired the IfDelayed brand. IfDelayed continues to operate today under the new owner. But when it purchased IfDelayed out of bankruptcy, Insurello did not take over the debts of the previous owner – nor was it legally required to.

A spokesperson for Insurello, which now owns IfDelayed, told Australian Frequent Flyer:

It is deeply unfortunate that Finnair has decided to proceed to demand legal fees from the customers despite being fully aware of their right to claim the fees from the bankruptcy estate of Ifdelayed AB. However, we as the new owners of the brand “Ifdelayed” do not have any legal responsibility for what occurred prior to the bankruptcy of Ifdelayed AB and acquisition of said brand.

We have made amendments to our terms and conditions, as well as information on the website, for all relevant markets we operate in so that a situation such as the one with Finnair cannot occur again.

IfDelayed currently boasts a Trustpilot score of 4.8 out of 5 on its website. But all of the positive Trustpilot reviews were written before the company went bankrupt and the new owner took over. Since then, all of the company’s Trustpilot reviews have been for 1 star and their current Trustpilot score is actually 4.5 out of 5.

IfDelayed website screenshot
IfDelayed displays a 4.8 Trustpilot score on its website.

We asked IfDelayed about this, and they told us “we update the Trustpilot score presented on our website continuously and shall immediately do so to reflect the current score.”

Passengers left with little choice but to pay

The correspondence received by the former IfDelayed clients in late 2020 was directly from KPF, the Finnish law firm that had taken the case to court on behalf of IfDelayed. KPF agreed to waive all of its own fees, but the clients still owed money directly to Finnair.

KPF suggested that the clients could appeal the court’s decision and try to get the costs moderated to a more reasonable level, since private individuals were now left to pay the debt.

nicnet, who lives in Finland, decided not to appeal and reluctantly paid the money to Finnair. He paid almost €7,000, equivalent to around AUD11,000.

“We’re not overly wealthy people. That money could have well been used for my kids’ education… this is money that we had earmarked for their future and we’re not going to be able to use,” nicnet told the AFF on Air podcast.

SandyS agreed to the appeal, but it too was sadly unsuccessful. Ironically, it also slightly increased the legal costs she now owed to Finnair. KPF advised that there was nothing more they could do, and SandyS was now left to deal directly with Finnair.

When she contacted Finnair and explained that this would represent a significant financial burden, she says the airline didn’t care.

“It is a financial burden, and I explained that to Finnair, and they were – let’s just say – unsympathetic. They told me that I had to pay it, and if I didn’t pay it, then they would pursue me. They would pursue me through the Australian courts, which they are legally entitled to do. And if they had to do that, then I would also be liable for their extra costs, which could run into hundreds if not thousands of dollars,” SandyS said.

In the end, after seeking further legal advice, she felt she had little choice but to pay the almost AUD13,000 owed.

Other parties have also been caught up in this sorry saga, and it’s safe to say they’re not happy about it.

A cautionary tale

To be clear, it doesn’t seem that any individual or organisation has broken any laws. Finnair has merely defended itself to the full extent of the law, as it is entitled to do, and IfDelayed’s bankruptcy was likely due to the impact of COVID-19. But that doesn’t make it any less unfair for the individuals who are now thousands of dollars out of pocket through no fault of their own.

In response to this story, Finnair issued the following statement:

Finnair complies with the EU 261 obligation and pays compensation accordingly. In some cases, when we don’t believe compensation is payable, we choose to defend our position as EU compensation-related costs form a considerable cost item for airlines. While we understand that the legal costs may have come as a surprise and caused a burden to individuals, Finnair’s stance, in this case, was confirmed by the court ruling and we have then exercised our right to recover the cost from IfDelayed’s clients.

Flight delays are always unfortunate and sometimes the reasons behind them are beyond our control like in this case. In every case, our first priority is to make sure our customers reach their destination as soon as possible. We always recommend contacting us directly to ensure open and transparent communication about the merits of the case before commencing legal actions.

Ultimately, this is a story of a series of unfortunate events. If just one thing along the way would have happened differently, this injustice would likely not have occurred.

It’s also a cautionary tale for anyone thinking about using a claim agency to get compensation from an airline in the European Union. The vast majority of outcomes are positive, and tens of thousands of airline passengers have successfully used these agencies to get compensation they otherwise would not have been able to on their own. But there is a tiny chance, as this story demonstrates, that things might not turn out the way you expected.


You can listen to interviews with nicnet and SandyS on episode 66 of the AFF on Air podcast.

You can also join the discussion on the Australian Frequent Flyer forum: Finnair Fiasco from 2016


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Matt Graham
The editor of Australian Frequent Flyer, Matt's passion for travel has taken him to over 60 countries… with the help of frequent flyer points, of course!
Matt's favourite destinations (so far) are Germany, Brazil, New Zealand & Kazakhstan. His interests include economics, aviation & foreign languages, and he has a soft spot for good food and red wine.

You can contact Matt at [email protected]