The European Regions Airline Association (ERA) recently announced its support of and agreement with the International Air Transport Association’s (IATA) position on governments considering new rules to address airline bankruptcy.
The IATA’s said policies ensure passengers are returned home when an airline ceases operations. Airline insolvencies, however, are rare. Between 2011 and 2020, only 0.07 percent of flight-only passengers were affected by an insolvency, according to the European Commission.
Nations have discussed creating a fund for the purpose of repatriating or refunding money to passengers affected by bankruptcies. The fund would increase costs for European consumers while decreasing airlines competitiveness, IATA said.
Instead of a fund, IATA encourages the review of existing bankruptcy laws.
“The amount of passengers affected compared to the actual total number of passengers carried does not justify the creation of this fund,” ERA Director General Montserrat Barriga said. “We consider that specific and more restrictive measures for airlines would be discriminative compared with other means of transport and would also penalize the financially prudent airlines. Aviation sector plays a critical role in the European economy, creating wealth and jobs, and further regulation such as the creation of a fund risks unintended consequences, including making travel more expensive and distorting competition in the marketplace.”