ERA supports IATA’s position on airline bankruptcy

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ERA (the European Regions Airline Association) fully agrees with and supports the position IATA has released in response to some governments considering new rules to address airline bankruptcy, such as the creation of a fund for repatriating or refunding passengers.

  • Airline insolvencies are rare. IATA highlights that according to the European Commission, between 2011 and 2020, some 0.07 percent of flight-only (as opposed to packaging travel) passengers would be affected by air carrier insolvency. In addition, only 12 percent of the 0.07 percent initially impacted (or 0.0084 percent of the total number) would be stranded abroad and in need of repatriation.
  • There are enough mechanisms in place today that ensure passengers are looked after and returned home in the rare occurrence of an airline ceasing operations.

Creation of a fund would decrease the competitiveness of airlines and increase costs for European consumers. There are numerous means for passengers to obtain a refund for their airline tickets (via credit card, insurance on a credit card or via direct insurance with the airline, travel agency or tour operator). Additionally, travel agents are protected through IATA’s Billing and Settlement Plan, with refunds coming from the settlement between travel agents and IATA.

ERA agrees with IATA’s recommendation of a review into existing bankruptcy laws to permit the continued operations of airlines in insolvency, allowing more passengers to complete their travel, and to consider an increased priority for passenger refund claims.

Montserrat Barriga, ERA’s Director General says: “ERA fully supports IATA’s position. The aviation industry has an extremely strong track record in dealing with the repatriation of stranded passengers. The number of passengers affected compared to the actual total number of passengers carried does not justify the creation of this fund. We consider that specific and more restrictive measures for airlines would be discriminative compared with other means of transport and would also penalise the financially prudent airlines. Aviation sector plays a critical role in the European economy, creating wealth and jobs, and further regulation such as the creation of a fund risks unintended consequences, including making travel more expensive and distorting competition in the marketplace.

18 January 2018

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