Airlines refund row escalates

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Global airlines warn 25 million jobs across the world could be at risk from the coronavirus air travel downturn and held out against refunds to passengers as cash runs out.

The International Air Transport Association (IATA) issued the warning as part of a series of messages about the state of airline industry, while urging governments to help.

Germanwings became the latest corporate casualty of the crisis as German parent Lufthansa announced its closure as part of a broader overhaul. Germanwings operates under the wider low-cost brand Eurowings.

In a weekly briefing, IATA highlighted job losses and impact on the world economy if governments allow airlines to collapse. A climate group wants bailouts to come with stiff conditions.

Three months of severe travel restrictions plus lower traffic over 2020 could put 25 million jobs at risk, IATA warned, adding about a third of 2,7 million direct jobs in the airline sector were either lost or furloughed.

IATA, whose members include Lufthansa and British Airways parent IAG, said global air travel slumped by 70% this quarter, meaning airlines with grounded fleets and dwindling cash cannot afford refunds.

Director General Alexandre De Juniac said airlines, facing $35 billion of potential refund claims by the end of this quarter, hoped passengers would accept vouchers.

“The key element to avoid running out of cash so refunding cancelled tickets is almost unbearable financially speaking,” De Juniac told reporters.

REFUNDS LAWSUIT

Airlines are burning through cash reserves trying to stay afloat. IATA said providing refunds for cancelled flights, as rules in parts of the world including the European Union require them to do, was not possible.

Some consumer groups are angry at airlines for ignoring those rules and say hard-up passengers need the cash as much as the airlines.

In the US, a passenger filed a class action lawsuit against United Airlines for refusing a refund after his family’s flight was cancelled.

The airline declined to comment saying since the crisis started it had given customers flexibility allowing them to change flight plans without a fee.

The US Transportation Department told airlines they must refund tickets for cancelled flights following increasing consumer complaints and inquiries.

The refunds row escalated as US carriers slashed more flights and held talks with Treasury over terms of $25 billion earmarked for payroll costs.

Airlines, unions and Democrats are trying to minimise equity or potential future stakes government might take in compensation for support.

In Europe, environmental group Stay Grounded published an open letter signed by 250 environmental groups and charities from across Europe calling on governments to attach climate and labour conditions to airline bailouts.

De Juniac said airlines were committed to ambitious targets and would not abandon the effort due to the crisis.

IATA asked governments for lower charges and taxes to help its 290 members – which transport 82% of global traffic – survive. It wants funds to restart routes in future.

The airlines body said European countries agreed to defer air traffic control charges totalling over a billion euros from February to May.