EU Countries Ask For Refund Requirement To Be Suspended

Yesterday, twelve European nations asked for the airline cash refund requirement to be scrapped, and airlines allowed to issue travel vouchers instead. This action is to help airlines with their cash flow and ensure they have some liquidity leftover instead of refunding all passengers.

Lufthansa tails getty images
Airlines like Lufthansa are asking not to give passengers refunds. Photo: Getty Images

What are the details?

In the European Union, passengers traveling on airlines are protected by a fantastic set of regulations that ensure that they are compensated due to canceled or delayed flights.

The statute in question is as follows:

If a flight is canceled, passengers are automatically entitled to their choice of

  1. rerouting to the same destination at the earliest opportunity (under comparable conditions);
  2. later rerouting, at the passenger’s convenience, to the same destination under comparable conditions (subject to seat availability); or
  3. a refund of the ticket as well as a return flight to the point of first departure, when relevant.

Any ticket refund is the price paid for the flight(s) not used, plus the cost of flights already flown in cases where the cancellation has made those flights of no purpose.

With the cancelation of nearly every flight in the EU, airlines can’t offer rerouting or later rerouting, and are thus required to ‘drain their bank accounts’ to repay passengers. Then, in turn, these same cash-strapped airlines are asking for state assistance.

Spanis bugget airline Volotea
If the airlines are bailed out by governments, then the taxpayer is essentially paying back their refund. Photo: Volotea

What is the new proposal?

As reported by Reuters, twelve different European transport agencies have linked together to urge the European Commission to suspend regulations forcing airlines to refund passengers due to canceled flights.

“I’m glad a very large majority of member states are supporting my request to authorize airlines and maritime groups to temporarily use vouchers when trips are canceled, to relieve their cash reserves while protecting passengers’ rights to a refund,” French transport minister Jean-Baptiste Djebbari said in a statement to Reuters.

Several large airlines such as Lufthansa and Air France have bordered on the edge of insolvency and have asked their countries for support. 

Previously the European Commission has stood by its regulation, claiming to Forbes in April that “airlines have the option to offer vouchers instead of reimbursement, but passengers must agree to these vouchers. The airlines must provide a refund instead of a voucher if the passenger requests it.”

If European airlines are allowed to pay back passengers with a voucher, then it will stem the flow of outgoing cash. Photo: Pixabay

The consortium of member transport agencies have suggested that airlines be allowed to issue transport vouchers instead of a refund but will enable a cash refund if the passenger wants it a few months down the line before the coupon expires. They are thus saving the passenger and the airline money.

Interestingly, this law, while decided at the European Commission level, it is enforced by the member governments. Thus some governments like the Netherlands have gone ahead and told airlines to ignore the refund rule for now. 

What do you think of this plan? Should the EU force the airlines to give passengers a refund? Let us know in the comments.