Will anyone actually be compensated for flights after the Friday IT crash?
Airports and many other public and private services were affected by the computer system crash on Friday July 19
As the world recovers from Friday’s massive IT outage, which was caused by a CrowdStrike security update to Microsoft Azure products and which has been described as the worst the world has seen, the pressing question remains: who will pick up the bill for the damage?
From tech giants to financial services, a multitude of industries were affected, but among the heaviest losses were likely in the aviation industry, which appears to have been the sector most severely impacted.
As a consequence, the aviation industry is expected to face significant losses due to the outage, but claiming compensation for these losses is unlikely to be straightforward, especially for airline passengers.
One factor is regulatory differences, with compensation rules differing between the US and the EU, affecting what passengers can claim. There is also the question of Primary Responsibility.
In the event of delayed or cancelled flights, passengers typically seek refunds from the airlines first. However, airlines might argue that they are not obliged to pay compensation for delays or cancellations caused by “extraordinary circumstances”.
Additionally, passengers with travel insurance might face difficulties if their policies do not include travel disruption cover.
This might mean that the best bet for those passengers who booked their delayed or cancelled flight using a credit card is to see if they can recover the costs through their card issuer, rather than directly through the airline.
The problem is that no one is quite sure yet whether the losses from the IT outage are covered by insurance policies. Where they are, it is likely under a cyber policy specifically covering income loss due to a third-party service interruption, but the policy wording might specifically exclude malicious attacks on software or IT services providers and the duration of system downtime.
In addition, many insurance policies only cover losses after a system has been out of service for between six to 12 hours.
In response to the outage, Microsoft released a recovery tool to help IT administrators repair Windows machines impacted by CrowdStrike’s faulty update that crashed 8.5 million Windows devices. The tool creates a bootable USB drive to help quickly recover affected machines.
For now, and while the world continues to pick up the pieces, it remains far from clear what the financial consequences of this outage will be and who will ultimately pick up the tab.
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