Travel stakeholders are warning that thousands of customers will be left out of pocket and travel operators could face huge losses as a result of the Belgian carrier Air Belgium’s bankruptcy.
The European Travel Agents’ And Tour Operators’ Association (ECTAA) said in a 15 May statement that Air Belgium’s liquidation left €8 million in outstanding passenger refund claims, of which more than €5 million was sold through travel intermediaries. Those firms are now required by law to provide an alternative ticket to customers, “often without any prospect of recovering the original funds from the insolvent airline,” ECTAA pointed out.
As a result of the financial exposure, the group is demanding the “swift introduction of mandatory airline insolvency protection in Europe.” Legal protection would alleviate what ECTAA calls “an unfair financial burden on travel intermediaries, who are left to absorb the losses caused by airline failures. Travel intermediaries are 98% SMEs and often micro enterprises.”
Frank Oostdam, President of ECTAA said the situation was a “stark reminder that the current system leaves both consumers and travel intermediaries exposed to unacceptable risks.” He insisted that “Airlines must be required to provide financial guarantees to cover their liabilities in case of insolvency.”
Some jurisdictions have protections in place, such as the Danish air ticket guarantee, ECTAA notes. With Council of the European Union discussions about revising Air Passenger Rights Regulation (Regulation 261/2004) ongoing, ECTAA is urging policymakers to “seize this moment” and require airlines to put in places guaranteed ticket refunds when flights are cancelled due to an airline ceasing operations or going bankrupt. The association said such measures would be “straightforward to implement and would finally provide the protection that consumers and travel intermediaries urgently need.”
Following the bankruptcy and takeover of Air Belgium by CMA CGM shipping group, Niky Terzakis, Air Belgium’s CEO, said the airline “would have preferred a different outcome for our passenger operations, which impacted some of our employees and customers. However, this transfer was the only viable option after all other rescue paths were explored.”
He referred to the Air Belgium trajectory as “a series of challenges, including several years of global crises brought on by COVID-19, the war in Ukraine, and others,” he said, adding: “The company took every necessary measure and did all it could to ensure its survival, despite the many obstacles. I am extremely proud of our staff for their loyalty, expertise, energy, and unwavering commitment.”
