Launched in May, the review is investigating Covid refund policies for flight-only bookings across all UK airlines, as well as international airlines operating flights to and from the UK.

The CAA says it has published guidance for carriers and consumers, and that it supports airlines offering vouchers and rebooking alternatives in lieu of refunds "where it makes sense for consumers".

However, in the first major update on the review’s progress, the CAA said it had reiterated to airlines they must provide cash refunds for cancelled flights where requested by passengers.

"We do not expect airlines to systematically deny consumers their right to a refund," said the CAA on Wednesday (1 July). "Our review is considering whether any further action needs to be taken to protect consumer rights."

The CAA said all 18 airlines contacted during the review have engaged, and all have confirmed "they are now paying refunds".

Their performance on refunds, meanwhile, has been broken down into three categories: acceptable performance; requiring transparency improvements; and requiring processing time improvements.

Those performing acceptably are paying refunds quickly, and do not have a sizeable backlog. The CAA said while the regulations require refunds for cancellations to be paid within seven days, it would take a hands off approach owing to the "operation challenges" airlines are facing owing to coronavirus.

"We will continue to monitor the performance of these airlines, but as things stand, we do not expect further work to be required unless there is a material change in performance," said the authority.

Of those requiring transparency improvements, the CAA said its review identified a second group of airlines that did not appear to be providing refunds at all, according to passenger complaints. These carriers are now refunding.

Several airlines, said the CAA, had introduced new refund procedures. "More work remains to be done by this group of airlines to make it clear to passengers that they are entitled to a refund and show that there is a straightforward process for claiming it," said the CAA.

It added these airlines would be given a "short period" to make improvements before being judged definitively on their performance.

Finally, the CAA said those airlines needing to speed up refund process had a "substantial" backlog which was "taking too long to process".

"This group includes some major carriers with large backlogs of refund requests extending to many months," said the CAA, adding these airlines have been asked to provide commitments they will speed up timescales for processing refunds.

"We have received responses from a number of airlines agreeing to this request," the CAA added. "We will assess the suitability of these commitments and, should we accept them, we will monitor the airlines’ performance against them.

"If performance does not improve in line with the commitments, the Civil Aviation Authority will not hesitate to take enforcement action.

’Marked improvement’

The CAA said a more detailed report on the review’s progress would follow later this month.

"Only a minority group of airlines have been consistently providing consumers with refunds in an acceptable timeframe," said the authority.

"However, we have noted a marked improvement across most airlines since our review commenced. We expect this direction of travel to be maintained."