Issue Refunds Not Vouchers, European Union Tells Airlines

Airlines must reimburse customers for flights cancelled because of the COVID-19 pandemic, the European Union transport chief said on Wednesday, rejecting calls by carriers to relax European Union rules and allow a European Union-wide waiver of refund obligations.

European Union Transport Commissioner Adina Valean also said the parameters could be changed for compliance with a United Nations climate scheme, scheduled to begin in 2021, following so many flight cancellations because of restrictions on movement to contain the novel coronavirus.

As airlines seek government support, carriers say refunding hundreds of thousands of tickets will drain them of money.

Get the Latest on Coronavirus and the Travel Industry on Skift’s Liveblog

Valean told Reuters that European Union law could not be altered easily.

“In order to change any provision of this law, you would need wide support for an agreement from the other institutions,” she said in a telephone interview, referring to the European Council of governments and the European Parliament.

“We are not going to act on legislation at this stage.”

Consumer organisations say some major airlines are already flouting the refund rules, obliging customers to take vouchers.

By some estimates, a prolonged shutdown would make about $3.9 billion of Germany’s Lufthansa revenue eligible for refunds in the second quarter.

Valean acknowledged the liquidity problems, but said European Union governments have other ways to help, which the Commission, the European Union executive, is monitoring.

“We are aiming at considering an encouragement towards consumers to pick up on vouchers, if this kind of instrument is properly guaranteed through a governmental fund or something,” she said.

The Commission has already relaxed state aid rules to allow government support for airlines. The European Parliament agreed in March to suspend the requirements for airlines to run most of their scheduled services or forfeit landing slots.

UNITED NATIONS BENCHMARK

Turning to climate, Valean said she was willing to push for a revision of the parameters agreed by the United Nations’ aviation agency’s Carbon Offsetting and Reduction Scheme for International Aviation scheme for offsetting greenhouse gas emissions.

Without taking into account the impact of the coronavirus, starting next year the scheme will require airlines to buy offset credits to cover any emissions above a baseline of 2019-2020 levels.

Airlines want the scheme baseline changed to a different year, possibly 2018-2019, when emissions were higher than they will be in 2020.

The higher the baseline emissions, the fewer carbon credits airlines will need to cover the gap between the agreed benchmark and their actual emissions.

“I personally believe that it needs to be changed,” Valean said of the baseline, adding she would talk to the Commission’s climate policy arm about an alternative.

Campaigners have raised concerns the pandemic could result in weaker climate regulations to help struggling transport firms.

Valean said the Commission planned further measures to curb carbon emissions from transport, which accounts for roughly a quarter of the European Union’s greenhouse gas output. These include a proposal to add shipping to the European Union carbon market, and a sustainable transport strategy later this year.

(Reporting by Marine Strauss @StraussMarine and Kate Abnett; editing by Barbara Lewis)

This article was written by Kate Abnett and Marine Strauss from Reuters and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to [email protected].