Refunding passengers for cancelled flights in the wake of the coronavirus pandemic would be an “unbearable task” for cash-strapped airlines, the head of an industry group says, as many companies opt to offer vouchers instead.
Alexandre de Juniac, the chief executive of the International Air Transport Association (IATA), told reporters on a weekly conference call Tuesday that the coronavirus outbreak has caused the “biggest crisis” ever seen in the airline industry. Many companies are concerned with survival, he said, with just a few weeks worth of cash on hand.
“The key element for us is to avoid running out of cash, so refunding the upfront ticket is almost unbearable, financially speaking, in this terrible situation,” de Juniac said from Geneva.
“We are perfectly conscious of the difficulty for the passenger not to be refunded immediately. But the point is that it is a matter of survival for us. We have no cash to refund the upfront ticket.”
He also said IATA, which represents 290 airlines around the world including Air Canada and WestJet, is open to offering vouchers or deferred refunds that can be delayed for a period of time to avoid using the limited cash resources currently available to airlines.
“It’s very difficult to find the cash in our balance sheet to refund the upfront tickets,” de Juniac said. “That’s the reason why the industry has proposed to pay with vouchers.”
While U.S. and European Union officials have ordered airlines to reimburse passengers for cancelled flights, Canadian airlines are not obligated to do the same. The Canadian Transportation Agency (CTA), a quasi-judicial organization that resolves disputes related to air travel, issued a statement in late March allowing airlines to provide vouchers or credits for future travel instead of refunds.
“An appropriate approach in the current context could be for airlines to provide affected passengers with vouchers or credits for future travel, as long as these vouchers or credits do not expire in an unreasonably short period of time,” the CTA statement said, adding that 24 months “would be considered reasonable in most cases.”
Many Canadian carriers are offering customers flight rebookings or vouchers, but not refunds, a move that has infuriated many travellers. This comes as airlines call for Ottawa to provide financial relief for the industry, something Prime Minister Justin Trudeau has signalled the government will do.
Several online petitions have been launched calling on Ottawa to ensure airlines provide passengers with refunds for cancelled flights. One petition, started by air passenger rights advocate Gabor Lukacs, had garnered nearly 24,000 signatures as of Tuesday afternoon. Another, calling on the federal government to refuse to provide bailout funds to any airline that does not refund customers, had nearly 4,000 signatures.
Airlines around the world have had to cut capacity, ground planes and lay off thousands of employees to reduce costs as revenue drastically declines and, in many cases, disappears. Globally, the number of flights has decreased by 70 per cent when compared to the same time last year, IATA said, with Europe being particularly hard hit, reporting a 90 per cent drop in flights. IATA said that a third of the 2.7 million people that work in the airline industry have either lost jobs or been furloughed.
The Conference Board of Canada estimates that the airline industry will suffer 40,000 job losses in Canada as a result of COVID-19.
With files from the Canadian Press