Airlines received a sliver of good news on Wednesday when the European Commission agreed that cancellations related to the COVID-19 coronavirus should be considered “extraordinary” circumstances within the context of EC261 rules. As a result, passengers displaced by such cancellations are not due compensation from the airlines. Still, the carriers did not get everything they were looking for and remain concerned about associated expenses that could further deepen their forecast losses.
In light of the mass cancellations and delays passengers and transport operators face due to the COVID-19 pandemic, the Commission wants to provide legal certainty on how to apply EU passenger rights.– Commissioner for Transport Adina Vălean
Right to care remains in place
Under the guidance issued passengers are not eligible for compensation resulting from a canceled flight but they are still entitled to other “right-to-care” benefits. This includes food and lodging while awaiting a rebooking. Airlines expressed concerns about such obligations as the opportunity to rebook passengers on other flights is limiting and quickly disappearing. With borders closed and flights blocked some travelers may be forced to wait out a significant delay for a rebooking. The EC guidance, however, does not forgive the obligation at this time. Indeed, it notes that passengers “are especially vulnerable in such circumstances” and demands that adequate care be provided.
In response to the guidance Thomas Reynaert, Managing Director, Airlines for Europe (A4E), issued a statement suggesting “an emergency amendment to Regulation 261 may be needed, and would be welcomed by the sector. Reynaert continues, “In the meantime, we also expect member states in the European Council to come to an agreement on the review of the Regulation before the summer.”
Refunds or vouchers??
The EC261 regulation also calls for passengers to receive a refund to the original form of payment when a flight cancels. Some carriers are pushing vouchers for future travel as an option rather than a refund. In its guidance the European Commission reiterated the passengers on cancelled flights are due a full refund, not just a voucher.
At the same time, however, the Commission notes that “The EU’s passenger rights regulations do not address situations where passengers cannot travel or want to cancel a trip on their own initiative.” This includes border closings. Under the EC261 rules that alone is not enough to trigger a refund nor to obligate an airline to issue vouchers for future travel, though many are providing that through a waiver of change fees.
The Commission guidance continues:
This situation has to be distinguished from the situation where the carrier cancels the journey and offers only a voucher instead of the choice between reimbursement and rerouting. If the carrier proposes a voucher, this offer cannot affect the passenger’s right to opt for reimbursement instead.
In other words, if an airline cancels the flight it MUST allow for a refund, even if a voucher offer is also in play. Airlines are not keen on this part of the decision.
Speaking on their behalf IATA’s Regional Vice President for Europe Rafael Schvartzman suggests that to enforce cash refunds could hasten the failure of the airlines:
The Commission appears to considerably underestimate the crisis afflicting airlines in Europe. Faced with a cashflow catastrophe, many airlines can only offer vouchers in lieu of immediate cash refunds for cancelled flights. The Commission must accept that this solution – which many people would regard as reasonable in the current extraordinary circumstances – should be facilitated. The Commission needs to understand that fiddling at the edges will not keep airlines in any shape to get the economy moving again when the health crisis abates. This is not a short-term issue—air connectivity will not be back to normal for many months. And for some airlines, things will never be the same again.
More on COVID-19 and the airlines affected
- Alaska Airlines offers elite bonus earning in face of COVID-19 booking weakness
- Massive cuts, uncertain recovery timelines for aviation in the face of COVID-19
- Qantas cuts international 25% through September facing coronavirus-induced demand drop
- Spirit Airlines plans 5% growth reduction for April as COVID-19 hurts demand
- American Airlines slashes schedule, increases flexibility for customer rebookings
- US to block some European visitors
- Two key takeaways from American’s latest schedule cuts
- Regulators suspend slot rules, opening door to deeper airline cuts
- Beyond route cuts, airlines initiate extended suspension of operations
- Gogo looks to ride out coronavirus-related dip in demand
- Trans States Airlines: The first US airline victim of COVID-19
- JetBlue removes 40% of capacity, delays new deliveries as demand drops
- Airlines get a break on coronavirus EC261 comp, looking for more
- Airport lounges shutter as airlines slash capacity
- Will COVID-19 delay the opening of Berlin Brandenburg Airport?
- Qatar Airways plans 75% capacity cut in response to COVID-19
- Emirates, Turkish Airlines slash route networks, ground aircraft
- JetBlue plans additional draw down in service
- Is it time for US airports to start closing terminals??
- Converting to cargo: Putting passenger planes to use in the COVID-19 era