Airlines furious at EU’s stance that passengers cannot be forced to accept vouchers

Airlines have reacted with fury to the European Commission’s fresh demand that passengers must be given cash refunds for cancelled flights, and cannot be forced to accept vouchers instead.

The EU’s executive body had been under pressure to ease passenger rights to allow airlines withhold cash refunds by a group of member states and business lobbies concerned about a collapse of the aviation industry due to coronavirus.

However, the lobbying failed, and the commission is now threatening to move against member states for failing to implement EU law if they fail to enforce passenger rights and hold airlines to account.

"If you have lost your job, if this is your entire holiday budget for travelling that sits in these tickets you cannot use any more, then you need a refund. And that is why we say this is your right, full stop," said commissioner Margrethe Vestager.

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A letter will be sent to all EU states to “ensure respect of passenger rights”, and to outline suggestions to make vouchers more attractive if airlines want more passengers to accept them instead of refunds.

A statement issued jointly by the International Air Transport Association (IATA) and Airlines For Europe (A4E) – an umbrella group representing Air France-KLM, EasyJet, IAG, Lufthansa and Ryanair – as well as other airline groups decried the "lack of leadership" from the commission.

It said the measures would “not alleviate and could even contribute to the financial distress of airlines and the wider tourism industry”, adding that the “unclear and non-binding EC recommendations will create further confusion for airlines and passengers at a time when clear, decisive regulatory action is urgently needed”.

Compromise

That managing director of A4E, Thomas Reynaert, said that "while passengers have a clear right to reimbursement of their tickets, we believe refundable vouchers, or a delayed reimbursement, represents a fair and reasonable compromise given the unprecedented liquidity situation airlines are currently facing".

Rafael Schvartzman, IATA's regional vice-president for Europe, said that "at a time when airlines are facing the greatest crisis in their history, we are disappointed and astonished that the commission has ignored the request from the majority of member states for a temporary amendment to Regulation 261/2004".

“Millions of jobs are at risk if airlines collapse. Action from the commission now would safeguard consumer protection, and help airlines through the current crisis.”

The commission stressed that the rules cannot be changed, and suggested that if airlines want fewer passengers to seek cash refunds they should make vouchers more attractive, for example by adding perks or making them transferable or redeemable for cash if unused by an expiry date.

“If one can afford to take a voucher or would like to support the businesses by taking a voucher, this can be made attractive,” Ms Vestager said, adding that long delays before reimbursement were “not what is supposed to happen”.

Hold off

Roughly 15 EU states – including Ireland – had backed airlines in asking that the rules be relaxed, and as many as 12 are thought to have been allowing airlines to hold off on paying refunds to passengers.

The European Consumer Centre in Ireland welcomed the recommendations which, it said, “confirmed that EU passenger and package travel rights remain unchanged”.

A spokeswoman stressed that the commission’s communication made it clear that while consumers can be offered vouchers, “it is entirely their decision to accept these or not”.

Pan-European consumer organisation BEUC also welcomed the report, saying it “came after a co-ordinated effort from almost 20 EU countries to try to temporarily amend the travellers rights’ legislations to suspend the right to a refund established in EU legislations and impose vouchers”.

"This is good and important news," said BEUC director general Monique Goyens. "It is precisely in times of crisis such as these that travellers should be able to rely on strong consumer rights. Trying to make consumers bail out transport and travel companies through cheap credit in the form of vouchers is unacceptable: consumers are not banks."