EU Nations Look To Overturn Cancellation Refund Requirement

Passengers in Europe are already struggling to get refunds from many airlines, and this situation could get worse. A group of 12 EU countries has today written to the European Commission requesting a suspension of the law that requires them to offer refunds. The Commission has already stated that the law still applies, but now individual countries are attempting to change things directly.

Wizz Air, Ryanair, Easyjet
European airlines may get support from the EU in issuing vouchers as 12 members write to the EU Commission. Photo: Getty Images

Appealing to the EU

According to reporting in Euronews, 12 countries have sent a letter to the European Commission asking for it to suspend the law requiring refunds and to allow them to offer vouchers to customers instead. This comes around three weeks after the EU confirmed that airlines would still have to provide refunds for canceled flights.

However, many airlines were not happy with this ruling. While the EU sets the law, it is up to individual countries to enforce it. Germany has already appealed. And KLM and Air France have stuck to issuing vouchers. Now Belgium, Bulgaria, Cyprus, The Czech Republic, France, Greece, Ireland, Latvia, Malta, Poland, Portugal, and the Netherlands have written to express their concern.

Air France KLM shares getty images
France and the Netherlands are two of the countries writing to the EU Commission on behalf of their airlines. Photo: Getty Images

Regulations not designed for the current situation

The 12 countries argue in their letter that the EU law regarding refunds was not designed to cover unforeseen circumstances such as the current coronavirus crisis. The letter reads:

“Regulation EC (No) 261/2004 and its obligation to reimburse canceled tickets in cash, if the passenger so decides, places airlines in a difficult situation where they are facing a serious cash flow challenge. When the wording of the regulation was conceived, the current global crisis and its impact on air travel could not have been foreseen.”

Offer regulated vouchers instead

The request is to allow airlines to choose the means of reimbursement and to be permitted to offer vouchers instead of cash. This would be implemented by the European Commission and provide a standard set of rules and criteria for all airlines. The member states also point out the importance of regulating such vouchers, and for looking at ways to protect passengers in case of future airline bankruptcy. They write:

“We believe that regulating the temporary issuance of vouchers is possible and acceptable for
consumers, if some key principles are taken into account: transparent information to the passenger, non-discrimination, a common length of voucher validity, maximum flexibility of use and a clear right of reimbursement immediately at the end of validity in the event of non-use of vouchers.”

KLM grounding
KLM is one airline that is already asking customers to take vouchers. Photo: Getty Images

Forcing consumers to bail out airlines

There is no denying that airlines are in a difficult financial situation at the moment. IATA recently estimated that airlines in Europe would face a 55% reduction in revenues in 2020. Allowing airlines to defer refunds and payments would no doubt help them through the crisis. In their letter, the member states explain:

“The goal shared by the European Union and its member states must now be to preserve the structure of the European air traffic market beyond the current crisis while considering the interests and necessary protection of passengers.”

Air France grounded planes
The industry is at a standstill now, but airlines believe vouchers will help speed the recovery. Photo: Getty Images

They point out as well that issuing vouchers will help the industry recover by stimulating demand post-crisis. But is it right to force customers to wait for their money back, effectively helping fund the airlines through the crisis? Monique Goyens, head of the European consumers’ organization BEUC, thinks not. She explains her view, in reporting by Forbes, saying:

“We’ve seen countless examples of airlines and travel companies undermining consumers’ rights by trying to push people to accept vouchers. Consumers should not be forced by governments to pick up the bill to bail out the travel industry.”

It remains to be seen how the EU Commission will respond to this. It has already emphasized that the law should stand in the current crisis, but as the situation continues to worsen, perhaps it will change its stance.

Simple Flying reached out to several major airlines for their comments on this submission to the EU Commission. Air France-KLM responded that it already offers refundable vouchers (not cash refunds) to passengers on flights canceled due to coronavirus. It explained,

Air France and KLM believe that the issuance of a refundable voucher constitutes a fair solution and a reasonable balance between the protection of their passengers and the operational realities that every airline has to face.”

We had not heard back from other airlines at the time of publication.