In what Europe’s travel industry has pitched as a war between regulations and survival, a middle-ground solution may be emerging, with prodding from several national governments.
Under EU regulations, those who have had flights and some vacation arrangements canceled because of the virus crisis are entitled to cash refunds within two weeks, a provision that worked well enough when only a few flights were canceled. But with nearly all flights canceled, airlines lacked the cash to make all refunds immediately, saying to do so would force them into bankruptcy.
Their solution: Offer vouchers for future travel instead, and hold the cash for now. Some airlines have stated outright their intentions; others have simply delayed or made refunds difficult. At least twelve European governments, faced with the loss of their aviation infrastructure, have sided with the airlines, asking EU regulators to put refunds on hold.
The EU Commission, the union’s executive, has up to now ordered airlines and governments to comply, even sending warning letters this week to several governments, including the Netherlands, which had officially announced it was turning a blind eye to the rule.
But at a press conference called to announce a framework for restoring European tourism and re-opening borders among the nations over the next few months, Margrethe Vestager, European Commission Vice President, said the letters were advisory, not punitive, and recognized that ‘Many companies have problems and this liquidity crunch would be less severe if customers accepted vouchers instead of cash refunds.’ She suggested that vouchers be guaranteed by governments against airlines or tour companies folding, be valid for at least a year, and be refundable after a year if not used.
UPDATE: The Dutch government has shifted its position, asking airlines to be more open to refunds, especially when customers express financial need. KM said at first it would comply, and would encourage customers to accept vouchers valued at 115% of the refund. However, it quickly walked that back to apply only to flights canceled after May 14th.
Above: Margrethe Vestager during the press conference. Photo: Xavier Lejeune EC Audiovisual Service
