C19 – Letters COM_Valean – Insolvency Protection 26 June 2020

Adina-Ioana VĂLEAN
Member of the Commission
European Commission
Rue de la Loi 200
1049 Brussels

Cc:
Walter GOETZ, Head of Cabinet
Gaelle MICHELIER, Member of Cabinet
Răzvan MARC, Policy Assistant
Filip CORNELIS, Director

Brussels, 26 June 2020

Dear Commissioner,

Re: Airlines' refunds and insolvency protection

Since the beginning of the Covid-19 pandemic, there are heated debates around the issue of tickets refunds
for cancelled flight services.
Airlines argued - and still do - that respecting the obligations to refund customers (both consumers directly
or indirectly through travel agent and tour operators) as provided by EC Regulation 261/2004 is not possible
in the context of this unprecedented crisis.
Such arguments could be accepted as excuse during the very first days of this unprecedented crisis. 3 months
later, airlines have received €26.6 billion Euros of bailout money from governments1, with an additional €6.5
billion under discussion. Yet, even airlines that received State aid are still massively infringing their obligations
under EC Regulation 261/2004, many of them still just offering vouchers.
On 13 May 2020, the European Commission published the Recommendation 2020/648 on vouchers as an
alternative to reimbursement for cancelled travel packages and transport services in the context of Covid-19
pandemic. In this document, the Commission recommended vouchers to “be protected against the
insolvency of the issuer” and invited Member States to make “vouchers a more attractive option for
consumers”2. Six weeks later it is an undeniable fact that not a single Member State has decided to follow
the recommendations of the Commission.
For travel agents, tour operators and consumers, it is of utmost importance that vouchers are protected. For
many years, ECTAA has been calling for an airline insolvency protection scheme borne by the airlines as it is
the case for tour operators and travel agents. There have always been airlines failing – about one per month

1
https://www.transportenvironment.org/what-we-do/flying-and-climate-change/bailout-tracker
2 https://ec.europa.eu/commission/presscorner/detail/en/ip_20_854

ECTAA AISBL, Rue Dautzenberg 36, B – 1050 Bruxelles, Tel : +32 (0)2 644 34 50,
E-mail : secretariat@ectaa.eu / www.ectaa.eu
in Europe alone – while monies paid for tickets in the future are not protected. This is a massive burden for
the travel industry and customers alike. Nothing has been done so far on this and with very large volumes of
vouchers for cancellations due to the coronavirus crisis, the situation has become even more critical. While
we need a solution in place for vouchers, there is also an urgent need for a long-term airline insolvency
protection.
In a press release of 17 June 2020, the International Air Transport Association (IATA) is calling for continued
financial and regulatory support while mentioning “the worst may be yet to come”.3 We share these concerns
and are aware that the restart of the industry after a nearly complete stop for months means quite an
increase in costs for airlines. Several of them might not be able to get through this.
The conclusion today is that both European Commission and national governments are turning a blind eye
to this situation and simply paying lip service to both the air ticket value chain and consumers. As an example
in Spain, ECTAA member organisation ACAVe submitted so far 39 airline infringements of Regulation
261/2004 to AESA, the National Enforcement Body of EU Air Passenger Rights in this country. However, AESA
has still not undertaken any actions to compel airlines to comply with their obligations.
While airlines are breaking a Regulation with a total impunity, travel organisers are struggling to have the
necessary liquidity to refund customers, especially given that the same airlines, their main service suppliers,
are keeping the monies already paid for flights being cancelled.
The European Commission ensured that Member States comply with the provision of the Directive
2015/2302 on package travel, but is still failing to take action to ensure that in the Member States EC
Regulation 261/2004 is properly enforced. Should the Commission stay on this course, organisers will become
insolvent, with “a risk that many travellers and passengers would not receive any refund at all, as their claims
against organisers and carriers are not protected. The same problem may arise in a business-to-business
context, where organisers receive a voucher as reimbursement for prepaid services from carriers, which later
become insolvent” as stated by recital 14 of the Recommendation 2020/648.
Therefore, ECTAA, on behalf of the European travel agent and tour operator community, calls upon the
Commission
• to ensure that NEB's are immediately taking the ad-hoc measures to oblige airlines to refund in cash
(when that is the option chosen by passengers) within the time-limit set in article 8.1 a) of EC
Regulation 261/2004 in all the markets they are operating (and not only their home markets).
• to substitute itself to Member States and create a travel guarantee fund to avoid that the foreseeable
failures of airlines in the coming months will not mean worthless vouchers for travel companies and
consumers. This could also be the basis for a long-term protection against airline insolvencies.

We remain at your disposal for any further information.

Yours sincerely,

Pawel Niewiadomski
President

3
https://www.iata.org/en/pressroom/pr/2020-06-18-01/

ECTAA AISBL, Rue Dautzenberg 36, B – 1050 Bruxelles, Tel : +32 (0)2 644 34 50,
E-mail : secretariat@ectaa.eu / www.ectaa.eu