Romanian airline Blue Air has announced today it is suspending operations. The suspension will last until September 12th, and comes after the airline had its bank accounts frozen by the Ministry of the Environment. In a statement, the airline said,

“Due to an unforeseen situation consisting in the seizure of all the accounts of the company Blue Air Aviation S.A. by the Ministry of the Environment, Blue Air is unable to pay the current costs, necessary for the operation of daily flights, which is why it is forced to suspend all flights scheduled to depart from Romanian Airports, until Monday, September 12, 2022.”

All its planned flights for today, September 6th, operating from outside of Romania to an airport in Romania, will go ahead as planned. However, any flights due to leave the country will be canceled. A quick look at FlightRadar data shows all departing Blue Air flights from Bucharest as being canceled already today.

The low-cost airline had its accounts seized by the Ministry of the Environment, forcing the airline to suspend its operations as it can no longer cover its costs. No reason is given for this drastic measure by the airline, but the carrier has been in a bit of hot water with Romania’s National Authority for Consumer Protection (ANPC) for several weeks now.

Fined €2 million, €13 million to repay

Blue Air is currently reeling from a €2 million ($1.98 million) fine imposed by the consumer protection authority ANPC back in July relating to its cancelations and repayment of customer funds. The airline canceled some 11,289 flights, corresponding to 178,405 reservations, between April 30th, 2021 and April 30th, 2022. ANPC says that the airline had deliberately collected money via promotional campaigns but later canceled the flights, which is in breach of EC Regulation 261/2004.

The fine was imposed on Blue Air on July 14th, but that was just the tip of the iceberg. ANPC further demanded that Blue Air repay its customers an estimated €13 million ($12.8 million) for the fares collected in respect of these canceled flights within 10 days of the order. On top of that, ANPC set about campaigning to stop people from buying more tickets from the airline, stating that,

ANPC recommends consumers to be extremely vigilant and avoid purchasing plane tickets from economic operators who, in the past, have canceled many flights and have not respected consumer rights.

The fine was the largest ever handed down by the consumer protection authority, but was targeted after ANPC received more than 1,000 cross-border complaints about the airline. Blue Air intended to challenge the fine and the ruling, with Blue Air’s president Oana Petrescu claiming that the numbers were all wrong. She told Economica that,

“[The numbers] refer to all tickets canceled in that period due to pandemic waves 3, 4 and 5 (which are less than 10% of all Blue Air flights in that period anyway). Of the total number of passengers mentioned, most have either already traveled or will travel this summer.”

Reputational damage

The airline has decried the actions of the ANPC, particularly the directing of its customers to stop buying Blue Air tickets. The carrier stated today that this action has led to,

The significant destruction of passengers' trust in Blue Air, generating losses of over 5 million euros, by reducing the volume of ticket sales

It also says that the mistrust generated by ANPC has increased pressure from its suppliers to make payments for daily services required to operate the airline, something which is entirely impossible now as its bank accounts have been frozen.

The airline was in the process of seeking new investors, and had been holding discussions in London with two major investment firms to support its recovery from the pandemic. Now, it says, those talks will be scuppered. The airline stated,

The irresponsible statements and actions of a representative of the Romanian State, as well as the impetuous decision to block all the bank accounts of the company, brought Blue Air into the undesirable situation of reducing its operations for the next period, with the aim of facilitating the completion of the analysis of the impact of the side of investors and obtaining the necessary authorizations for discussions with investors.

Blue Air is the largest Romanian airline by passengers flown, with bases at Bacau, Cluj and Turin and its hub at Herni Coanda International in Bucharest. Pre-pandemic, it was flying more than five million passengers per year with a fleet of 25 airplanes. Today, it has just 14, all from the 737 family, with two 737-500s, one -700, six -800s and five 737 MAX 8. It has five further MAX 8 on order.

Whether the airline will be able to come back from this operational pause remains to be seen, but history tells us it’s not easy to restart from such a full stop.

Sources: Economica, Romania Insider, ANPC