PARIS: European airlines waiting in line for coronavirus bailouts want to tap another source of interest-free loans: their customers.
Cash-strapped carriers are seeking to suspend European Union rules requiring refunds for cancellations and instead issue vouchers to customers left out of pocket as hundreds of thousands of flights are grounded by the pandemic.
Refund claims, if honoured, would be a major additional cash drain on many airlines already in need of government aid to survive a sustained travel slump.
Consumer organisations say some major airlines are already flouting the refund rules and condemn what they describe as an attempt to force consumers to lend them cash.
“We’ve been absolutely inundated with passengers complaining they can’t get a refund from their airlines,” Rory Boland of British consumer group Which? said yesterday.
The European Commission has rejected industry calls to relax the requirement in EU regulations to refund cancellations within a week, but airlines say they are unable to comply.
“Faced with a cashflow catastrophe, many airlines can only offer vouchers in lieu of immediate cash refunds for cancelled flights,” industry association Airlines for Europe (A4E) said.
A prolonged shutdown would make about 3.5 billion euros of Lufthansa revenue eligible for refund in the second quarter, Citi estimates – ahead of the 3bn euros at IAG or Air France-KLM, 770 million euros at easyJet and 760m at Ryanair.
“Basically, we are trying to push as many vouchers as possible, and not allow for cancellations just to be refunded immediately,” Lufthansa’s finance chief Ulrik Svensson told investors last week.
A Lufthansa spokesman said that refunds remain “possible in principle”, but not “within the usual time limits”.
Air France-KLM, which like Lufthansa has grounded the vast majority of its flights, is telling clients it no longer offers the immediate refunds required under European law.
Instead it is issuing a customer credit valid for one year that can be refunded only at the end of that period.
“Air France recognises clients would normally receive immediate reimbursement,” its website says, blaming exceptional circumstances and “a very high number of refund requests”.
Airlines are now asking European authorities to waive refund requirements on condition that vouchers are reimbursable after a minimum of 12 months, an A4E spokesperson said.
The EU has already relaxed airport slot rules and passenger compensation and will offer airlines more help, Transport Commissioner Adina Valean said. “But people have to receive their money back if that is what they want.”
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