Fourteen European governments are in favour of allowing airlines to issue vouchers instead of refunds for cancelled flights, as the EU’s passenger rights charter creaks under the pressure created by the coronavirus outbreak.
Air travel is down up to 90% in Europe because of lockdown and quarantine measures prompting mass cancellations of flights. Airlines have tried to offer vouchers instead of refunds to customers, in an attempt to keep cash reserves intact.
But EU rules say that when services are cancelled, another flight option or ticket reimbursement should be provided. Carriers can propose vouchers but it is up to the discretion of passengers whether to accept them or a refund.
Cracks are appearing, as a group of 14 countries – including Belgium, France, Germany, Italy and the Netherlands – are in favour of a more lenient stance towards passenger rights.
The Netherlands has instructed its air travel regulator not to enforce the regulation while there is a slump in demand and has attached conditions to any vouchers issued by airlines.
The coupons will be valid for a period of 12 months and if customers choose not to cash them in, a full refund will still be issued, according to a letter sent to parliament by the Dutch infrastructure minister, Cornelia van Nieuwenhuizen.
“The government considers the temporary use of vouchers an acceptable alternative, because a passenger retains the right to a refund of their ticket, and airlines avoid going into even greater financial distress,” the letter reads.
The European Commission is tasked with making sure member states stick to their obligations under EU law and on 18 March, it published a clarifying note on how the passenger rights codex should work during the virus disruption.
Although the Commission acknowledged that the current situation qualifies as “exceptional circumstances”, so passengers are not entitled to compensation, the aviation industry was disappointed that vouchers were ruled out.
EU transport chief Adina Vălean doubled down on that no-nonsense approach last week. In emailed comments, she told EURACTIV that vouchers are an option “but the passengers must agree to that”.
“Some member states, for example, Denmark, made vouchers more attractive to consumers and secured them against insolvency. The Commission will continue to monitor the evolution of the situation and measures taken at the national level,” she added.
The Dutch option of putting a time limit on coupons could yet gain traction, as it preserves a passenger’s rights to a refund yet buys time for airlines to ride out the slump but the Commission is so far sticking to its guns.
Members of the European Parliament would have to give their blessing to a temporary derogation from the rules but it is difficult to judge where the majority would vote if asked.
Transport committee chair Karima Delli (Greens) insists that “offering vouchers instead of reimbursement is not acceptable” and has urged airlines to “strictly comply with EU law” so passengers do not end up “double victims of the coronavirus pandemic”.
Delli’s uncompromising position is shared by most of her group and is largely supported by Socialist and Democrat (S&D) lawmakers.
It is unclear where the liberal Renew Europe and Vălean’s own conservative EPP groups stand on the issue, although Parliament sources said that MEPs are leaning towards helping the airlines.
The Parliament has already shown willingness to help the aviation industry. Last month lawmakers decided to put costly ‘use it or lose it’ airport slot rules on ice until October, in order to banish empty so-called ‘ghost flights’ from Europe’s skies.
But the environmental and economic dimensions of that waiver was a uniting force for MEPs, whereas giving the green light to a passenger rights derogation, however temporary, will prove divisive.
Storm clouds ahead
Regardless of its passenger rights stance, the Commission is doing its bit to allow governments to help airlines. Last month it relaxed state aid rules so that companies in every sector can benefit from financial aid and more aid is on its way this week.
According to a proposal for further changes to the rules, recapitalisation will be included in the EU executive’s new lenient state aid playbook, expected to be adopted later this week.
It means that member states will be able to allow debt restructuring without fear of falling foul of EU law, which is likely to prepare the ground for more significant state intervention in airline businesses.
The European Passengers’ Federation (EPF) has called for a guarantee system that would shore up ticket refunds in the event of airline bankruptcy and not leave passengers with useless vouchers.
Environmental groups are adamant that public money should only be spent on airlines if they commit to paying green taxes and cutting emissions further when demand picks up.
Andrew Murphy of clean mobility NGO T&E said that “public money should support the technologies of the future and not reinforce the mistakes of the past”.
Former EU officials, including the bloc’s previous climate Commissioner, Miguel Arias Cañete, and head of the climate directorate, Jos Delbeke, have both said in the past week that airlines must do more to reduce their carbon footprint after the virus passes.
The EU’s competition services will not be able to attach green strings to state aid packages but the bloc’s flagship climate policy, the Green Deal, means the Commission will be looking to make deeper emission cuts across the board once business returns to normal.