Airline's Bankruptcy Sparks Refund Turmoil and Perceived Inequity for Travel Firms
Thousands of Travelers Face Unrecovered Funds After Air Belgium's Bankruptcy
Brussels-based airline Air Belgium's liquidation has left travel agents and tour operators with €8 million in unpaid refunds, according to the European Travel Agents' and Tour Operators' Association (ECTAA). More than €5 million of these funds were sold via travel intermediaries, resulting in a legal obligation to offer alternative tickets to affected customers. However, ECTAA notes that these intermediaries might struggle to recover the initial funds from the insolvent airline.
In light of this, ECTAA is pushing for a quick adoption of mandatory airline insolvency protection within the European Union. The introduction of such protection would help alleviate an unfair financial burden on travel intermediaries, many of which are small and medium-sized enterprises (SMEs), according to the association's president, Frank Oostdam.
Oostdam stated, "The current system leaves consumers and travel intermediaries exposed to unacceptable risks, and airlines must be required to provide financial guarantees to cover their liabilities in case of insolvency." In support of his point, he references the Danish air ticket guarantee as an example of a workable protection mechanism.
ECTAA also urges policy-makers to take advantage of ongoing discussions regarding the revised Air Passenger Rights Regulation (Regulation 261/2004) by mandating guaranteed ticket refunds in cases where flights are canceled due to an airline's ceasing operations or bankruptcy.
Meanwhile, Air Belgium's CEO, Niky Terzakis, acknowledged the airline's demise and its impact on both customers and employees. Terzakis attributes the airline's predicament to a series of challenges over several years, including the COVID-19 pandemic, the war in Ukraine, and other factors. He commended the airline's staff for their resilience and dedication during these adverse circumstances.
Following Air Belgium's bankruptcy and subsequent takeover by CMA CGM shipping group, Terzakis emphasized that the move was the "only viable option" after exploring all other possible rescue plans.
- ECTAA is advocating for the quick adoption of mandatory airline insolvency protection within the European Union, as this could alleviate the financial burden on travel intermediaries who are struggling to recover unpaid funds after Air Belgium's bankruptcy.
- In light of unrecovered funds totaling €8 million from Air Belgium's liquidation, ECTAA is urging policy-makers to mandate guaranteed ticket refunds in cases where flights are canceled due to an airline's ceasing operations or bankruptcy, as part of the revised Air Passenger Rights Regulation.
- As Air Belgium's CEO, Niky Terzakis acknowledges the airline's demise and its impact on customers and employees, he believes that exploring alternatives, such as eco-friendly tour options promoting sustainable eco-lifestyle travel, could provide a more resilient future for the aviation sector.
