Probe For Potential Abuse of Air Passenger Rights

The European Court of Auditors (ECA), which monitors European Union spending and management, announced last week that it is launching an audit to assess whether the European Commission took sufficient steps to ensure air passenger rights were upheld during the COVID-19 pandemic.

Image - Miguel A. Lopez//EPA

The ECA will also appraise whether emergency aid given to the transport industry by national governments appropriately considered passengers, and whether the current legal framework is fit to safeguard air passenger rights in times of crisis. Irish low-cost carrier Ryanair estimates the total state aid to airlines approved by Brussels since the beginning of the pandemic at more than €30 billion.

“In times of COVID-19, the EU and member states have had to strike a balance between preserving air passenger rights and supporting the ailing airlines,” said Annemie Turtelboom, the ECA Member leading the audit. “Our audit will check that the rights of millions of air travellers in the EU were not collateral damage in the fight to save struggling airlines.”

The EU auditors’ report is expected to be released in summer. Part of its aim is to help “restore trust in aviation” according to an ECA statement. The ECA will specifically look into national governments’ decision to allow airlines flexibility on whether to offer vouchers rather than refunds to passengers. Several national governments backed down from their demand for full refunds following industry complaints over the financial toll this would bring. The European Commission issued guidelines and recommendations at the time, stating that offering vouchers does not affect the passengers’ entitlement to a cash refund, but the ECA contends that passengers were often pressured by airlines to accept vouchers in lieu of cash. “In other cases, airlines did not refund passengers on time or not at all,” said the ECA.

Above and Below - Lufthansa and Air France, in common with most airlines, have both received significant financial support from governments to see them through the downturn in travel

Top image - Kevan James

Lower Image - Berlin Brandenburg Airport

The European Commission’s Air Passenger Rights regulation, passed in 2004, gives air travellers the right to cash refunds and to re-routing if their flights are cancelled, significantly delayed or if they are denied boarding. Passengers stranded in airports as a result of cancelled flights are entitled to compensation such as free meals and accommodation under the regulation. Attempts to update the regulation have stalled, as the European Council has been unable to agree a common position.

Airlines were blindsided by the COVID-19 eruption across Europe in late February 2020. Around 70% of flights were cancelled due to strict government health measures that discouraged travel to contain the spread of the pandemic. The travel chaos was compounded by frequently uncoordinated emergency measures by EU countries, such as flight bans, last-minute border closures, and quarantine requirements. Airlines saw revenue plummet, leading many to request government aid to shore up their flagging balance sheets. Total state aid given by European governments to airlines since the start of the pandemic is estimated at more than €30 billion, including €11 billion to Lufthansa, €10.6 billion to Air France-KLM, €3.5 billion to Alitalia, and €1.3 billion to SAS.

Irish low-cost airline Ryanair launched a legal challenge against the European Commission on anti-competition grounds, arguing that allowing member states to financially prop up ailing airlines constituted favouritism to legacy carriers. The EU’s General Court rebuked the claim, ruling that the state aid “does not constitute discrimination” (see below).

In addition to bailing out airlines, 12 EU countries notified the EU executive of state aid measures to shore up their tour operators and travel agencies to the tune of some €2.6 billion.

Image - Tyler McDowell

Ryanair's Court Losses

Last month, Ryanair lost two EU court challenges to massive public bailouts of rival companies such as Air France and SAS designed to help them get through the coronavirus pandemic – an outcome the company immediately said it would appeal. The Irish low-cost airline has pursued a legal campaign across Europe to stop bailout deals for the bloc’s legacy airlines, arguing the state aid gives them an unfair advantage.

Ryanair has long railed against the support given to national champions, and is often backed by the European Commission, which requests that companies make concessions – such as giving up valuable departure slots in busy airports – in return for state aid. But the company lost two cases on Wednesday: one involving a tax delay for Air France and other French airlines, and another that offers loan guarantees for Sweden’s airlines, mainly SAS. Ryanair said it would appeal, sending the cases to the EU’s highest court, the European Court of Justice.

The EU’s lower General Court, based in Luxembourg, said in a statement that “this aid scheme is appropriate to remedy the economic damage caused by the COVID-19 pandemic and does not constitute discrimination,” in reference to the French case.

On the Swedish case, the court said that the limitation of the loan guarantee scheme to national airlines “is appropriate for achieving the objective of remedying the serious disturbance in Sweden’s economy”.

Image - Tyler McDowell

Ryanair, Europe’s biggest airline in terms of passenger numbers, is also seeking to undo Germany’s bailout of Lufthansa in the EU courts, as well as schemes in Spain, the Netherlands, Denmark and Portugal.

Ryanair said it is counting on Europe’s higher court to “give airlines and consumers a glimmer of hope that national politicians obsessed with their flag carriers will be sent back to the drawing board and required to use state aid wisely”. This would “assist the recovery of traffic in the post-COVID world instead of bailing out their favoured airline at the expense of fair competition and consumers,” the company added.

In a brief statement, Air France welcomed Wednesday’s decision in its favour. Ryanair estimates the total state aid to airlines approved by Brussels since the beginning of the pandemic at more than 30 billion euros, including 11 billion to Lufthansa, 10.6 billion to Air France-KLM, 3.5 billion to Alitalia, and 1.3 billion to SAS.

Based in Ireland but hugely popular in the UK, Ryanair was able to get an emergency loan worth 690 million euros from British public authorities in May last year. Ryanair has also criticised the EU’s decision to continue to waive the “use it or lose it” airport slot rules during the pandemic, breaking with the official (more positive) position of A4E, the airline representative group the company is a member of. The slot waiver measure was first introduced in March 2020 to stop pandemic-hit airlines from flying almost empty planes – so-called “ghost flights” – to maintain access to ports. The company decried the decision, saying it distorts competition and allows dominant airlines to maintain slots at major airports that could be offered to better-performing low-cost carriers.

Via Euractive News

Books From KJM Today:

Coming Soon:

The Web's Premier Resource for Airport History: