WRITTEN QUESTION E-1469/02

by Michael Cashman (PSE) to the Commission

(27 May 2002)

Subject: Passenger protection plan

The 11th of September 2002 plunged the airline industry into an unprecedented crisis. The industry, already weakened by the economic recession, saw the disappearance of a number of airlines,

such as Sabena, Swiss Air, Axon, Ansett, etc. As a consequence, thousands of travellers were stranded throughout the world, without appropriate recourse to repatriation or reimbursement. More than half a year after the terrorist attacks in the US, the industry is still in turmoil and numerous are the airlines that are struggling to survive.

In its Communication entitled Protection of Air Passengers in the European Union published in June 2000(1), the Commission observes that there is no special need to protect consumers against bankruptcy of airlines as opposed to other financial risks, as the chance of bankruptcy is not particularly high. It further notes that Regulation 2407/92(2) on the licensing of Community air carriers ensures financial soundness and various forms of protection. Yet, these provisions have not prevented a number of sound and reliable European airlines going bankrupt in the wake of the 11th of September. In view of the recent terror acts in the world is the Commission still of the same opinion that protection against an airline's financial default is not necessary?

In the said Communication, the Commission refers to an industry initiative creating a guarantee fund, by which passengers would be repatriated and reimbursed in case of an airline's bankruptcy. Is the Commission aware of the progress of this initiative?

We understand that many European flag carriers are not in favour of a passenger protection fund on grounds that they do not want their passengers to pay for the possibility of bankruptcy of other less sound and reliable airlines. Since this is a voluntary initiative, will the Commission be satisfied with a scheme that does not cover all European airlines or which will not cover airlines operating in Member States that have opted to stay outside the plan?

In the Air Passenger Protection Communication, the Commission states its intention to prepare legislation on contracts and conditions of carriage. Does the Commission intend to address better protection of passengers in case of an airline's bankruptcy in this legislative proposal?

(1) COM(2000) 365 final.

(2) OJ L 240, 24.8.1992, p. 1.

Answer given by Mrs de Palacio on behalf of the Commission

(3 July 2002)

The Commission is aware that not all Community airlines will adopt the passenger protection plan negotiated by organisations representing airlines and travel agencies (the International Air Transport Association and the European Council of Travel Agents Associations). In fact, the plan will be implemented in thoses states where a majority of airlines and travel agents agree to it, in the Community, that is around half of the Member States at present.

The drawback clearly is that such a voluntary scheme would protect some but not all passengers against the financial losses that a failure could cause and that competition between air carriers may be affected. Therefore the Commission will carefully monitor the effectiveness of the voluntary scheme and in particular future developments on the coverage of these measures.

As there are reasonable arguments for and against voluntary and obligatory schemes, the Commission believes it essential to consult all interested parties before drawing conclusions for policy. It intends to publish a consultative document on airlines' contracts with passengers, designed to prepare a proposal for legislation on these contracts. In this document it will pose the question of whether the Community should legislate to protect passengers in the event of bankruptcy or leave it to voluntary initiatives.