COVID-19 :: Recent Developments In The Airline Industry

Posted on: 04 May 2020

Category: Articles, News

Air travel has been one of the hardest-hit industries due to the devasting impact of the COVID-19 pandemic. Whilst countries around the world have closed their borders and are on lock-down, this has caused a significant decline in air travel with airlines grounding planes, suspending routes and having very few passengers on their remaining flights. The Government of Malta ordered the suspension of all commercial flights from the 21st of March 2020, which will remain in force until at least 31st May 2020.

Due to the difficulties faced by airlines in these exceptional circumstances, Malta, together with eleven other EU member states (Belgium, Bulgaria, Cyprus, Czech Republic, Greece, France, Ireland, Latvia, Holland, Poland and Portugal), in a letter dated the 29th of April 2020, called upon the European Commission to effect a temporary suspension on the law that compels airlines to grant refunds to passengers for cancelled flights.

Regulation (EC) No 261/2004 of the European Parliament and of the Council of 11 February 2004 establishes common rules on compensation and assistance granting passenger protection in the event of denied boarding and of cancellation or long delay of flights. Article 8(a) of this Regulation provides for the passenger’s right to reimbursement “within seven days of the full cost of the ticket at the price at which it was bought, for the part or parts of the journey not made, and for the part or parts already made if the flight is no longer serving any purpose in relation to the passenger’s original travel plan, together with, when relevant”. Furthermore, such refund has to be made in the manner stipulated in Article 7(3) that is: “paid in cash, by electronic bank transfer, bank orders or bank cheques or, with the signed agreement of the passenger, in travel vouchers and/or other services.”

Malta, along with the other Member States, proposed to the European Commission to provide for an amendment to the Regulation and set out specific guidelines, whereby airlines will be granted leeway in determining the manner in which passengers are reimbursed. This would reflect the present global crisis which could not have been foreseen when the Regulation was originally drafted, thus alleviating the difficulties airlines are now facing whilst ensuring that consumers rights are being safeguarded.

Although the Regulation caters for the issuance of travel vouchers as an alternative means of cash reimbursement this is only applicable with the passenger’s approval. Due to the cash-flow constraints experienced by their national airlines, the Member States have requested that airlines be permitted to offer vouchers instead of cash refunds protecting consumer’s rights in case of the airlines’ bankruptcy.

The circumstances surrounding COVID-19 are continuously evolving in this sector. The European Commission is expected to issue guidelines for the re-opening of air travel, most likely imposing rules relating to compulsory social distancing, sanitization and the use of protective clothing and equipment in airports and on-board aircrafts. Nevertheless, it is inevitable that the effect of the COVID-19 crisis will have an impact on airlines for years to come.

For more information or to discuss further these developments, you may email us on [email protected]