Keeping Airlines ‚Airborn‘: Commission Slams Plans to Cancel Flight Refund Scheme

Written by | Sunday, May 3rd, 2020

The EU Commission’s Executive Vice-President Margrethe Vestager has expressed concern about plans by a majority of member states to wave mandatory refunds for cancelled flights to help European airlines hard-hit by the coronavirus pandemic. Transport ministers were lobbying the Commission to suspend rules forcing the struggling airlines, which are no longer generating passenger business, to offer full refunds instead of a voucher for future travel with the aim to offer them a financial lifeline.But, Vestager, who also oversees the Commission’s Competition portfolio, expressed on Thursday (30 April) serious reservation about this proposal: “There are many passengers who would need the money. People may have lost their jobs, they may need money for medication, to pay their rent,” she said, adding that “…it’s very different for someone like me, who are privileged, who have my high salary, of course, I can accept a voucher. But it is these differences that make it kind of difficult to say well, of course, everyone should accept a voucher.“
According to a report from the UN’s International Civil Aviation Organisation (ICAO)published earlier this week, the pandemic is likely to wipe out between €141 billion to €213 billion in operating revenues for airlines.European airlines would be the most impacted with losses estimated to reach as much as €93 billion, ahead of their counterparts in Asia and the Pacific (€81billion) and in North America (€29.5 billion). Many governments have already announced large sums of money to help national carriers, with Amsterdam and Paris, for example, having pledged a combined €9 billion to rescue Air France-KLM. As for British Airways, the air carrier could lay offmore than a thousand pilotsif the airline succeeds in its plan to slash costs amid the coronavirus crisis, according to a letter reportedly sent to a pilots’ union. The UK flag carrier is also reportedly planning “significant” cuts to its 16,500 cabin crew in response to the coronavirus pandemic, which has all but grounded several airlines across Europe and beyond.
“Our industry is going to look very different as a result of this pandemic,” Boeing Chief Executive David Calhoun told investors earlier this week. “We will be a smaller company for a while.” But it is not only about the size of the business but also about the way passengers will travel in the post-pandemic era, defined by social distancing. Michael O’Leary, CEO of Ryanair, is against the idea of social distancing, notably in the form of middle seats on aircraft being left vacant. “If they do that, we’re not returning to flying at all,” the Ryanair chief executive recently announced defiantly. This fundamentally throws into doubt the business model of an airline like Ryanair, which is based on squeezing in as many passengers as possible and keeping its aircraft on the ground for only short turnarounds before sending them up again, allowing it to maximize the revenue per passenger mile (RPM).”The middle seat doesn’t deliver any social distancing, so it’s kind of an idiotic idea that doesn’t deliver anything anyway,” O’Leary told the Financial Times.

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