Europe’s airlines are expected to lose $76bn (£63bn) in passenger revenues over the course of 2020 because of travel bans combating the spread of the coronavirus outbreak, the industry body has warned.
The figures from the International Air Transport Association (Iata) suggest European airlines will bear a significant part of the global hit caused by the pandemic, which has resulted in an unprecedented decline in the number of passengers.
Thousands of passengers left stranded abroad by cancelled flights are not being told that they are entitled to their rerouting costs, consumer groups have warned.
Normally when an airline starts cancelling, passengers are entitled to EU compensation of €250-€600 (£230-£550). However, where the cancellation is deemed to be an “extraordinary circumstance” – something outside the airline’s control, such as coronavirus – then the rules do not apply.
However, passengers stranded abroad by the cancellation in the EU – or due to travel home on an EU carrier – are entitled to rerouting, or to have their alternative travel costs refunded.
Thousands of air passengers have found themselves on the wrong side of cancellations – particularly in Spain but also in places such as Morocco and Poland. If your flight is cancelled, passengers can ask the airline to be rerouted on to an alternative flight, if that is possible, or to pay for a train or coach replacement.
This applies all flights that start in the UK, EU, Iceland, Norway or Switzerland or flights that arrive in these countries if you are flying on a UK/EU-based airline.
The airline does not have to pay if the passenger chooses instead to receive a refund of the return flight’s cost. If it is possible to get home, passengers are advised to take the rerouting option. Passengers making their own way home should keep all receipts and keep accommodation and other costs “reasonable”.
In practical terms, passengers are having to fend for themselves, as it is all but impossible to get hold of airlines. Passengers trying to call British Airways on Friday described how it was impossible to talk to anyone – and that was before Donald Trump extended the US flight ban to include the UK and Ireland.
The bigger problem may well be getting the airlines to pay up. They have been reluctant to pay rerouting costs in normal times, let alone in the current climate. Ultimately, it remains to be seen whether they will still be in business to pay out, given that many are saying they are unlikely to survive without state help.
As a result, some travellers will likely find themselves relying on travel insurance, where their policy allows for travel disruption.
This is mostly offered by better, more expensive policies. Where the passenger used their credit card to book the flight – directly – with the airline, they may be able to hold their card provider responsible for their extra travel costs – if the flight costs more than £100 – and the airline refuses to pay.
Ultimately, the UK government may have to step in to repatriate large numbers of Britons stuck in places such as the Canary Islands or Morocco, where alternative travel is near impossible.
Passengers on package tours are better protected. Ski customers in France on package trips should be repatriated by the tour operator – and if the firm ceases to exist because it goes bust, the Civil Aviation Authority. The CAA would have to fund emergency repatriation flights, under the terms of the Atol protection. It is a similar story for any cruise passengers stuck abroad.
Rory Boland, the editor of Which? Travel, said: “This is a difficult time for travel operators and airlines but too many people are being given no information at all or poor advice that could risk them being left hundreds of pounds out of pocket. Airlines and operators must ensure they are informing customers of how they will get people home and, where appropriate, how they can claim for additional costs they’ve incurred, such as overnight accommodation.”
Iata has already warned it expects demand for passenger flights to fall by 38%, causing global revenues to fall by $252bn in 2020, almost halving the industry’s revenues compared with 2019.
Those estimates were based on three-month shutdowns across much of the world, with the lack of cashflow threatening the survival of airlines globally. The British airline Flybe, previously Europe’s largest regional carrier, collapsed at the start of the month as the coronavirus crisis caused a slump in bookings.
Rafael Schvartzman, Iata’s regional vice-president for Europe, said on Thursday that many airlines did not have enough cash to sustain them through more than two months of shutdowns.
The industry this week called for governments around the world to intervene with cash support – including cash injections, loans and tax reliefs – to stave off a “liquidity crisis”. Alexandre de Juniac, Iata’s chief executive, said that failure to do so could cause airlines to fail “en masse”.
US politicians have responded with a bailout for the industry expected to run to as much as $50bn in loans and cash support.
In the UK, the government has so far proven unwilling to give special assistance to the airline industry. The chancellor, Rishi Sunak, has pledged to pay 80% of the salaries of furloughed workers across the UK, but the government was thought to be against providing special support for airlines, some of which had boasted of strong balance sheets.
British Airways owner, International Airlines Group, this month said it had £8.9bn in cash and loan facilities available, while the budget carrier easyJet continued with a £171m dividend payout despite the crisis.
Environmental campaigners have also argued airlines should not be bailed out unless they have realistic plans to tackle the climate emergency.