The EU Commission’s Executive Vice-President has expressed caution over plans by a majority of member states to wave mandatory refunds for cancelled flights to help European airlines hard-hit by the COVID-19 pandemic.
Euronews broke the news on Wednesday that transport ministers from a majority of the bloc’s member states were lobbying the Commission to suspend rules forcing airlines to offer full refunds instead of a voucher for future travel.
The push, spearheaded by France and the Netherlands, aims to offer a financial lifeline to struggling airlines.
“Air carriers are no longer generating passenger business, yet they continue to incur high running costs,” a joint statement read.
It added that the rule to offer a full refund for a cancelled flight “places airlines in a difficult situation where they are facing a serious cash flow challenge.”
But Margrethe Vestager, who also oversees the Commission’s Competition portfolio, appeared lukewarm about the proposal on Thursday.
“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.
“I think 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,” she added.
Asked by Darren McCaffrey, Euronews’ Brussels correspondent, if the proposal would not amount to European citizens being forced to pay twice to bail out airlines given that many governments have already announced large sums of money to help national carriers, Vestager replied: “You can say that, yes”.
Paris and Amsterdam have for instance pledged a combined €9 billion to rescue Air France-KLM.
“What the colleagues who are handling this directly have to deal with right now is, of course, this dilemma that we do have European rights. On the one hand you need it and on the other hand, of course, the airlines are in a very difficult position because these are businesses with very high fixed costs and no income,” Vestager also said.
According to an April 28 report from the UN’s International Civil Aviation Organisation (ICAO), the pandemic is likely to wipe out between $153 billion to $231 billion (€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 $101 (€93 billion), ahead of their counterparts in Asia and the Pacific ($88 billion, €81billion) and in North America ($32 billion, €29.5 billion).
Vestager recognised that the bloc’s performance at the beginning of the health crisis was “messy”, argued it is now “getting better but we are not there yet”.
The pandemic has also once again exposed deep rifts between member states on where the future of the European project lie.
Several heads of states, including French President Emmanuel Macron and Italian Prime Minister Guiseppe Conte have warned that the pandemic could make or break the EU and urged for more solidarity and financial burden-sharing between member states.
But other nations, known as the Frugal Five, are publicly against deeper financial integration.
For Vestager, “the simple truth of the matter is that we can only recover together, because every business has a supplier in a member state, and a customer in a third member state”.
“Only if we see this and grow together, we can recover, we can fight climate change we can be more digital. So if everything thinks they are on their own, well then we would all lose,” she went on.