Millions of aviation jobs at risk, airlines can’t afford refunds

LONDON: Global airlines warned that 25 million jobs across the world could be at risk from the coronavirus travel downturn and the industry’s representative body said airline finances were so fragile they could not afford to refund customers.

The International Air Transport Association (IATA) has held a series of weekly news conferences, issuing increasingly desperate messages about the state of airline industry, and urging governments to help carriers.

In its latest warning, IATA whose members include the likes of Lufthansa and British Airways parent IAG said global air travel slumped by 70% at the beginning of the second quarter, and its Director-General Alexandre De Juniac said airlines could not afford to issue refunds. He said customers should accept vouchers.

“The key element for us is to avoid running out of cash so refunding the cancelled ticket for us is almost unbearable financially speaking,” De Juniac told reporters on Tuesday.

IATA highlighted the loss of jobs and the impact on the world economy if governments let airlines collapse.

Three months of severe travel restrictions plus lower traffic over 2020 could put 25 million jobs at risk, IATA warned, adding that about a third of 2.7 million direct jobs in the airline sector had either been lost or were furloughed.

Airlines are burning through their cash reserves as they try to stay afloat, IATA said, and providing refunds for cancelled flights, as rules in many parts of the world such as the EU261 regulation of the European Union, require them to do, was not possible.

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

IATA said about US$35 billion of tickets were due for refund at the end of the second quarter, and vouchers or a delayed refund was all airlines could offer. IATA has approached governments to ask them not to force airlines to provide cash refunds.

But the US Transportation Department has told airlines they must refund tickets for flights that they cancel, or make a significant schedule change that passengers do not accept, following a rising number of consumer complaints and inquiries.

In the United States, a passenger filed a class-action lawsuit on Monday against United Airlines for refusing to pay a refund after his family’s flight was cancelled.

Separately on Tuesday, an environmental group called 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 any airline bailouts.

IATA has been asking governments for a reduction of charges and taxes to help its members, which represent 82% of global air traffic, survive, and for funds to help restart routes in future.

It said on Tuesday that European countries had agreed to defer air traffic control charges totalling some €1.1 billion from February to May.