COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS PASSENGER PROTECTION IN THE EVENT OF AIRLINE INSOLVENCY
Date: 2013-03-18
Institutions: European Commission
Subjects: airline, bankruptcy, carriage of passengers, consumer protection, financial solvency, indemnification, ticket, traveller

EUROPEAN 
COMMISSION 

Brussels, 18.3.2013  
COM(2013) 129 final 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

PASSENGER PROTECTION IN THE EVENT OF AIRLINE INSOLVENCY 

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TABLE OF CONTENTS 

1. 

2. 

2.1. 

2.2. 

2.3. 

2.4. 

2.5. 

3. 

3.1. 

3.2. 

3.3. 

4. 

Introduction .................................................................................................................. 3 

State of play.................................................................................................................. 4 

Insolvencies in the EU ................................................................................................. 4 

Passenger Impact.......................................................................................................... 4 

Existing passenger protection ...................................................................................... 5 

Partial solutions and existing remedies ........................................................................ 5 

Protection of passengers has so far been limited ......................................................... 6 

The way forward: Positive lessons and existing good practice.................................... 7 

Applicability of passenger rights ................................................................................. 7 

Passenger related measures .......................................................................................... 8 

Rescue fares ................................................................................................................. 9 

Conclusions .................................................................................................................. 9 

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COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

PASSENGER PROTECTION IN THE EVENT OF AIRLINE INSOLVENCY 

1. 

1. 

2. 

3. 

4. 

5. 

1 

2 

3 

INTRODUCTION 

The  Single  Market  for  air  transport  has  brought  significant  benefits  to  consumers. 
These include a wider variety of air services (such as the development of "low cost" 
carriers  and  the  introduction  of  new  routes)  and  a  greater  choice  of  fares  due  to 
increased  pressure  on 
increased  competition.  However,  competition  places 
inefficiently  run  airlines  or  those  which  inadequately  respond  to  customer  demand; 
stress  points  being  highlighted  when  demand  declines  and  costs  rise.  Increased 
competition has paralleled a rise in the number of airline failures, with 105 European 
scheduled air carriers becoming insolvent between 2000 and the first six months of 
20121.  The  scale  of  such  insolvencies  varied  with  small  airlines,  offering  relatively 
few seats having little impact, to larger airlines, such as Spanair, Malév and Windjet, 
causing  major  disruption  for  individuals.  Passengers  who  had  departed,  or  were 
about  to  do  so,  when  a  carrier  became  insolvent  ran  the  risk  of  being  left  without 
assistance.  Such  failures  have  a  greater  impact  on  passengers  stranded  away  from 
home,  particularly  at  points  where  there  were  either  no  or  limited  alternative 
services. This issue has therefore raised both public and political attention. 

Unlike other services or transport modes, air tickets are often bought months before 
the flight departs. To ensure seats are filled as early as possible air carriers encourage 
passengers  to  purchase  by  offering  lower  fares  the  earlier  a  booking  is  made. 
Passengers can therefore be more vulnerable to air service provider insolvency.  

The  position  of  passengers  when  an  air  carrier  is  declared  insolvent  will  vary 
depending  upon  how  their  ticket  was  purchased.  The  most  significant  difference 
being  between  standalone  (flight-only)  tickets  and  those  purchased  as  part  of  a 
package.  Passengers  who  purchase  a  package  covered  by  the  Package  Travel 
Directive2  (PTD)  are  already  protected.  This  Directive  requires  organisers  to  either 
refund  the  consumer  or  make  alternative  flight  arrangements  and  provide  interim 
assistance (e.g. hotels/refreshments) if a contracted air carrier becomes insolvent.  
Regulation (EC) N°1008/20083, which governs the licensing of European air carriers, 
requires  Member  States  to  take  action  should  they  not  be  satisfied  with  the  capital 
adequacy  of  an  air  carrier  they  licence.  However,  the  current  EU  legal  framework 
does not establish any direct insolvency protection requirement for flight-only ticket 
holders - such passengers usually having to ensure their own protection.  

Regulation  (EC)  N°  1346/2000,  governing  cross-border  insolvency  proceedings, 
entitles passengers resident in another Member State to the insolvent airline to lodge 
claims for refunds or damages in foreign insolvency proceedings. However, even if a 

This figure includes managed "wind downs", takeovers and consolidations, which may have little or no 
passenger impact – such as BMI in 2012.  
Council Directive 90/314/EEC of 13 June 1990 on package travel, package holidays and package tours 
OJ L 158, 23.6.1990, p. 59. 
Regulation (EC) No 1008/2008 of the European Parliament and Council of 24 September 2008 on the 
common rules for the operation of air services in the Community (Recast). 

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6. 

7. 

2. 

2.1. 

8. 

2.2. 

9. 

passenger is successful in his/her claim, which is not certain, there would inevitably 
be a delay in receiving payment with the affected passenger having to meet their own 
costs in the interim. 

There is evidence that the awareness of passengers of the protection they may have is 
generally  poor,  even  for  those  covered  by  PTD.  In  a  survey  conducted  for  the 
Directorate General for Justice of the Commission4 to support potential revisions to 
that Directive, 66% of respondents did not know whether they were protected if the 
airline  they  were  booked  on  became  insolvent.  There  is  therefore  a  situation  of 
market  failure,  as  passengers  are  inadequately  informed  about  the  risks  they  incur 
and may not take action to protect themselves against them.  

In this context, especially for flight-only ticket holders, it is important that passenger 
protection be enhanced. Addressing this issue quickly could be achieved without new 
legislation  by  more  effective  use  of  existing  law.  With  this  aim,  this  document 
assesses the  current  state of play  and considers what  measures could  effectively be 
implemented  by  the  Commission,  vis-à-vis  the  competent  national  authorities  and 
stakeholders. 

STATE OF PLAY 

Airlines insolvencies in the EU 
Between 2000 and 2010 ninety six scheduled service5 air carriers became insolvent. 
The frequency of airlines ceasing operations fluctuated in this period with no distinct 
pattern. Peaks of fourteen air carrier insolvencies were observed in 2004 and 2008, 
but only three failures in 2000 and 2007. In contrast by 2011 this had fallen to one6, 
but  rose  to  eight7  major  scheduled  air  carriers  ceasing  operations  in  2012.  There  is 
some  relationship  between  the  distribution  of  insolvencies  and  the  size  of  Member 
States  aviation  markets,  the  largest  number  of  insolvencies  being  of  carriers 
registered  in  the  UK  and  Spain  (the  first  and  third  largest  markets  in  the  EU, 
measured  in  terms  of  passenger  numbers).  However,  this  may  only  demonstrate  an 
active intervention policy in those Member States.  

Passenger Impact 
An estimated total 1.4-2.2 million passengers were affected between 2000 and 20108, 
of  which  some  12%  were  stranded  away  from  home.  The  proportion  of  passengers 
stranded is low in comparison to the total number booked to travel but could not do 
so,  although  again  this  figure  fluctuated  and  was  higher  in  specific  cases  (e.g.  Air 
Madrid). Despite this the number of passengers impacted never exceeded more than 
500,000  per  annum9.  The  highest  number  of  failures,  in  terms  of  passengers, 
occurred  in  2004,  but  even  then  this  only  represented  0.17%  of  EU  passengers 
travelling that year10. 

4 

5 
6 
7 
8 
9 
10 

RPA, LE and Yougov, 2010. DG Justice Impact Assessment Annex 2 – Enhanced insolvency protection 
for consumers purchasing airline tickets – a survey. 
Steer Davies Gleave, Passenger protection in the event of airline insolvency - final report – March 2011. 
Viking Hellas 
BMI, Cirrus Airlines, Spanair, Malév, Cimber Sterling, Skyways, Air Finland and Windjet 
Central case scenario: 1.8 million, equivalent to 0.07% of all return standalone trips. 
Almost 777 million passengers were carried by air in 2011 in the EU-27. Source: Eurostat. 
Steer Davies Gleave report, pp. 41 to 44. 

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10. 

It is estimated that between 2011 and 2020 some 0.07% of all flight-only passengers 
will be affected by air carrier insolvency11. The number will vary annually, but this 
percentage  is  likely  to  increase  due  to  traffic  growth  and  as  there  are  now  fewer, 
larger  carriers  –  the  loss  of  any  therefore  having  a  greater  impact.  The  average 
number  of  passengers  affected  is  estimated  to  increase  from  325,000  in  2011  to 
480,000 by 2020. Of which, based on past statistics, some 12% are projected to be 
stranded. 

11. 

Whilst the overall proportion of passengers affected is low, the impact of insolvency 
on  individuals  can  be  significant.  Apart  from  the  inconvenience  of  the  disruption 
itself, passengers may incur a number of unrecoverable costs: 

•  Where  operations  cease  before  initial  departure,  passengers  must  choose 
between rearranging the trip or forgoing their journey. If they rearrange, they 
must  meet  the  cost  of  alternative  travel  which,  booked  at  short  notice,  will 
probably be more expensive. If it is not possible to organise alternative travel, 
or  the  passenger  does  not  choose  to  do  so,  then  they  may  forfeit  any  non-
refundable components of the trip (such as accommodation or car hire). 

•  Where  operations  cease  and  a  passenger  becomes  stranded,  they  will  usually 
have to arrange their own alternative travel. Again this will usually be at short 
notice and likely to be much more expensive than the cost of the original ticket. 
Capacity constraints may also lead to delay, with affected passengers having to 
meet  assistance  costs  and  compete  with  others  for  such  services.  Lack  of 
available  information  may  compound  a  passenger's  ability  to  economically 
make such arrangements. 

Between  2000  and  2012,  stranded  passengers  incurred  the  highest  immediate  costs 
from  airline  insolvency,  on  average  over  €796. 12  These  costs  varied  depending  on 
distance and the carrier concerned - stranded passengers due to travel on short-haul 
"low cost" carriers incurring an average cost of €335. 13  

Existing passenger protection provided under EU law 

Historically the problem of passenger protection has been:  

• 

• 

Neither  the  air  carriers  nor  the  competent  authorities  have  been  able  to 
sufficiently  ensure  in  advance  that  necessary  appropriate  arrangements  are  in 
place  to  re-route  flight  only  passengers  and  assist  them  in  the  interim  to 
provide ensure that their other rights are respected (e.g. information, assistance, 
and reimbursement). 

Passengers' rights under Regulation (EC) No 261/2004 have not been fulfilled 
by  the  failing  carrier  -  in  particular  rerouting  stranded  passengers  and  in 
providing  assistance  (such  as  accommodation).  This  has  meant  affected 
passengers have therefore had to be self-reliant 

Partial solutions and existing remedies 

Member  States  have  used  different  financial  tools  (e.g.  reserve  funds,  insurance 
schemes  and  bank  guarantees)  to  implement  their  PTD  obligations.  Some  have 

Steer Davies Gleave report, p. 41. 
These costs are an average estimated to have been incurred by stranded and booked passengers. Note 
this  average  is  significantly  increased  by  the  high  costs  incurred  by  the  large  number  of  passengers 
stranded in Latin America following the failure of Air Madrid. 
Steer Davies Gleave report, pp. 46 to 52. See table in paragraph 14 for cost composition. 

12. 

2.3. 

13. 

2.4. 

14. 

11 
12 

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individually  sought  to  address  the  flight-only  issue  by  extending  the  cover  offered 
under  their  PTD  arrangements  to  flight-only  ticket  holders.  In  Denmark,  the 
Rejsegarantifonden,  a  fund  which  provides  protection  under  this  Directive  was 
extended on 1 January 2010 to offer passengers the option of protection on all flights 
from Denmark on carriers established in Denmark. 

Scheduled  Airline  Failure  Insurance  (SAFI)  permits  flight-only  passengers  in  some 
States (such as the UK and Ireland14) to insure against some of the costs of air carrier 
insolvency. This commercial scheme is available on an individual basis and is also 
occasionally included in general travel insurance. SAFI covers the cost of rerouting if 
a  passenger  is  stranded  or  a  refund  of  the  original  ticket  cost  where  a  passenger 
cannot recover it. SAFI does not usually cover the cost of purchasing another ticket 
on an alternative carrier if a passenger has yet to start their journey, or any additional 
costs  incurred  as  a  result  of  delay  or  other  non-refundable  losses  such  as  car  hire. 
Cover is usually not available to any carrier known to be in financial difficulty and 
can be withdrawn from the market with little notice. Despite this the insurance sector 
considers there is room for increased use of insurance products like SAFI15. 

Payment  for  tickets  purchased  via  IATA-accredited  travel  agents  are  held  within  a 
central  payment  mechanism,  known  as  the  Billing  Settlement  Plan  (BSP),  before 
being passed to the airline (this is usually monthly, but this period can be shorter). If 
a member airline becomes insolvent, IATA may voluntarily refund passengers whose 
payments  have  not  yet  been  passed  to  the  airline.  Such  protection  is  limited  -  only 
applying to those passengers who booked within the payment period i.e. at most up 
to 30 days before the flight. Passengers booking via an IATA travel agent further in 
advance  of  travel  would  not  obtain  a  refund  as  the  money  is  no  longer  in  the  BSP 
system.16 

In  some  Member  States  purchases  made  by  a  credit  card  (and  some  debit  cards) 
allow consumers to claim a refund from the card provider in the event of the service 
provider's  insolvency.  However,  this  refund  is  usually  limited  to  the  cost  of  the 
original ticket and in some cases subject to a minimum amount17. 

Finally,  assistance  has  in  some  cases  been  provided  by  other  airlines  who  agree  to 
offer "rescue fares" at a nominal charge. 

Protection of passengers has so far been limited 

Of  passengers  purchasing  flight-only  tickets  affected  by  insolvency  between  2000 
and  2010,  some  76%  had  no  form  of  protection  other  than  Regulation  (EC)  No. 
261/2004.  This  legislation  only  came  into  effect  in  2005  and  in  practice  has  until 
recently rarely been applied in insolvency situations. 

The  majority  of  passengers  have  had  to  seek  a  refund  of  their  original  ticket  as  a 
creditor of the failed air carrier through national insolvency procedures with varying 
degrees  of  success.  Of  the  remainder,  14%  were  able  to  claim  a  refund  via  their 
credit  card  provider,  with  a  further  8%,  who  purchased  their  ticket  from  an  IATA 

Whilst  the  UK  and  Ireland  are  the  largest  markets,  SAFI  has  significant  market  share  in  Germany, 
Holland, Sweden, and the Czech Republic. In 2000-2010, SAFI cost between €3-5 per ticket, covering 
2% of passengers impacted by insolvencies. 
External 
Stakeholder  workshop 
- 
http://ec.europa.eu/transport/passengers/studies/doc/2011_30_03_minutes.pdf 
Debates  on  BSP's  qualities  and  shortcomings  can  be 
http://ec.europa.eu/transport/themes/passengers/studies/doc/2011_30_03_minutes.pdf 
In the UK purchases in excess of €125 (£100). 

found  on  DG  MOVE's  website: 

–  Brussels 

30  March 

study 

2011 

- 

- 

15. 

16. 

17. 

18. 

2.5. 

19. 

20. 

14 

15 

16 

17 

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21. 

3. 

22. 

23. 

3.1. 

24. 

25. 

26. 

travel  agent,  also  able  to  obtain  a  refund.  Only  2%  of  passengers  held  additional 
protection such as SAFI. 

As to other costs all but those who purchased SAFI are limited to the recovery of the 
cost  of  their  original  tickets.  However,  even  those  passengers  able  to  obtain  a  full 
ticket refund are estimated to be only able to recover 60-70% of their eventual flight 
costs if they decide to rebook, as the incremental cost of new flights is not covered. 
Stranded passengers recovered more of their costs if they held SAFI, but not under 
other  schemes.  Direct  assistance  to  passengers  was  only  provided  by  national 
authorities in a very limited number of cases. 

THE WAY FORWARD  

The proactive approach taken at a national level in early 2012 by Spain and Hungary 
following  the  suspension  of  operations  by  Spanair  and  Malév18  ensured  that  those 
insolvencies were better managed in comparison to similar failures. Whilst inevitably 
passenger  experience  varied,  on  average  it  would  seem  passengers  were  better 
informed,  re-routed  more  quickly  and  provided  with  more  immediate  levels  of 
care/assistance.  

To  identify  what  specific  measures  might  mitigate  the  impact  of  airline  insolvency 
the Commission wrote to Member States on 17 April 2012 requesting information on 
the approach they each took. The conclusions of that exercise are outlined below. 

Applicability  of  passenger  rights  in  cases  of  airline  insolvency  and  financial 
monitoring 

There was consensus the most desirable outcome for a passenger was an air carrier 
being  able  to  continue  operations  without  them  having  to  care  about  any  financial 
issues.  

Passenger rights, such as care, re-routing and compensation, under Regulation (EC) 
No.  261/2004  are  applicable  from  the  sale  of  a  ticket  and  are  unaffected  by  an 
airline's  financial  position.  There  is  an  obligation  on  Member  States  regulatory 
authorities  to  make  full  use  of  their  existing  powers  under  EU  law  to  ensure  air 
carriers  take  the  necessary  measures  in  this  regard.  Regulation  (EC)  No  1008/2008 
gives authorities powers in relation to the financial fitness of airlines to ensure that 
the latter will be in a position to meet their obligations under the consumer acquis. A 
number  of  Member  States,  the  UK  and  Spain,  therefore  use  Regulation  (EC)  No 
1008/2008  to  ensure  the  obligations  of  Regulation  (EC)  No  261/2004  are 
incorporated in air carriers business practices. 

Article  9(1)  of  Regulation  (EC)  1008/2008  states  that  the  licensing  authorities  of 
Member  States  must  suspend  or  revoke  the  Operating  Licence  of  a  Community  air 
carrier if they are no longer satisfied it can meet its actual and potential obligations 
for a 12-month period. Article 9(2) requires licensing authorities to make an in-depth 
assessment  of  the  financial  situation  of  a  carrier  and  to  review  its  licence  when 
financial problems are identified, or insolvency or similar proceedings taken against 
it.  Ideally  national  authorities  should  have  an  active  on-going  dialogue  with  such 
carriers to identify issues.  

18 

Transit  passengers  immediately  affected  Spanair  -  22,000  passengers  -  Source  BBC  news,  Malév  - 
some 7000 passengers- Source Malév press release 3 February 2012 

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27. 

28. 

29. 

30. 

31. 

3.2. 

32. 

The  monitoring  practices  of  regulatory  authorities  vary  from  annual  and  biannual 
management account reviews, to monthly evaluations of all the airlines licensed. The 
visibility provided by monthly evaluation, balanced by increased examination when 
problems are identified, would seem to offer the most benefit. Certain Member States 
target resources where they consider there is the greatest risk to passengers based on 
objective  criteria  including  size  and  type  of  operation,  geographical  coverage,  past 
financial trading and provision of "life line" services.  

Given  the  ability  of  an  insolvent  carrier  to  meet  its  obligations  may  be  limited, 
improved monitoring would allow Member States authorities to intervene at an early 
stage.  This  would  permit  licensing  authorities  to  anticipate  and  manage  the 
suspension  of  operations  and  ensure  passenger  right  obligations  are  upheld  while 
funds  are  still  available.  It  is  therefore  essential  to  identify  as  early  as  possible 
carriers  with  potential  financial  difficulties  prior  to  them  becoming  public  –  as 
beyond  this  point  it  is  often  too  late  to  act  –  and  engage  with  them.  For  example, 
where the UK licensing authority has identified financial concerns with an air carrier 
in  some  cases  it  has  required  contingency  plans  be  put  in  place  as  a  condition  of 
retaining  its  Operating  Licence.  This  plan  would  include  how  a  "wind-down"  of 
operations  might  be  organised  to  protect  passengers  (particularly  those  outside  the 
EU) if required.  

There are a number of benefits to this approach. Disconnecting the decision on when 
operations should be suspended from the failure itself has allowed company staff to 
re-route passengers with the active help of other airlines before the carrier is declared 
insolvent.  Such  a  solution  efficiently  ensures  appropriate  assistance,  rerouting  and 
information  is  provided  to  passengers.  Such  planning  also  allows  an  air  carrier  to 
concentrate its resources on repatriating passengers who may otherwise be stranded 
away from home (and to limit the number of passengers taken out). 

A  number  of  Member  States  drew  the  Commission's  attention  to  the  merits  of 
increased collaboration. Their view being that subject to commercial confidentiality 
an authority holding information of concern could draw the attention of the Member 
State  where  that  carrier  is  licensed  to  the  possible  need  for  closer  monitoring. 
Similarly, a licensing authority concerned with the possible insolvency of a carrier it 
licenses could liaise with authorities in other Member States to allow them to make 
contingency preparations. 

Some  Member  States  stated  that  the  consequences  of  a  possible  failure  could  be 
mitigated  by  promoting  with  the  carrier  a  progressive  phasing  out  of  unprofitable 
and/or distant routes/destinations where passenger assistance could be more difficult 
to arrange. In critical cases national authorities have actively managed their licensing 
function to ensure that a business was wound down at the lowest point in the carrier's 
demand cycle. Although there is no optimum time for an airline to cease operations, 
clearly the failure in peak season (for example at Christmas or Easter) when there is a 
shortage of alternative capacity has a greater impact on passengers than otherwise.  

Passenger related measures 

Accurate  and  timely  communication  is  key  to  minimising  the  impact  of  insolvency 
on  passengers,  particularly  those  stranded  with  limited  access  to  communication. 
However, effective channels of communication between a carrier and its passengers 
should  be  the  norm  irrespective  of  the  financial  status  of  the  carrier  -  established 
channels merely making managing its failure easier. 

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33. 

34. 

Some  authorities  have  required  carriers  to  accept  certain  restrictions  to  mitigate 
passenger loss, for example through the use of escrow accounts where ticket money 
(including  airport  passenger  charges)  is  independently  held  until  a  passenger  has 
flown, reducing the potential impact of a failure. 

Recent experience has shown that passenger interests are better protected/managed, 
where  the  enforcement  of  Regulation  (EC)  No  261/2004  and  Regulation  (EC)  No 
1008/2008  is  undertaken  within  the  same  national  authority,  or  where  such  bodies 
proactively cooperate. This approach should be promoted in that: 

• 

• 

Good  communication  channels  improve  the  handling  of  affected  passengers  - 
particularly where different national authorities enforce each Regulation. 

The  designated  national  enforcement  body  for  Regulation  (EC)  No  261/2004 
can identify where passengers might be stranded (obtaining data from airline), 
and  establish  a  coordinated  action  plan  involving  relevant  stakeholders  (other 
carriers,  airports,  Member  States'  own  government  departments  (e.g.  foreign 
affairs).  Airports  have  a  particularly  important  role  in  this  process:  providing 
information  to  stranded  passengers  and  ensuring  facilities,  such  as  toilets  and 
catering,  are  available.  This  approach  would  ensure  a  more  efficient  use  of 
resources and reduce unnecessary duplication. In this regard, the Commission's 
proposal for the revision of Regulation 261/2004 introduces an increased role 
for  airports  in  the  event  of  airline  insolvency  (Articles  5(5)  and  14  of  the 
revised Regulation). 

•  When  an  air  carrier  fails  the  designated  national  enforcement  bodies  could 
provide relevant passenger information (e.g. on "rescue fares"), either directly 
(e.g.  on  its  own  website)  or  through  information  channels  -  media,  airports, 
social media, airline associations or on a failed carrier's own systems. 

Rescue fares 
In July 2011, AEA, ELFAA, IATA, and ERAA19 advised the Commission that their 
members could assist in rerouting stranded passengers by making available existing 
spare  (or  possibly  additional)  capacity  when  insolvency  occurs.  In  such  situations 
member  airlines  charge  affected  passengers  a  nominal  "rescue  fare"  sufficient  to 
cover  outgoings  such  as  taxes  and  the  marginal  costs  of  carriage.  In  a  number  of 
recent  airline  insolvencies  such  rerouting  has  proven  effective  in  assisting  stranded 
passengers.  However,  such  a  solution  is  dependent  upon  the  willingness  of 
competitor airlines to offer such fares and the route concerned. Airline associations 
have suggested this process could be improved by Member States coordinating and 
even  funding  such  rerouting.  Airports,  for  example  AENA20  following  the 
insolvency of Spanair, have also assisted by offering reduced or waiving passenger 
related charges.  

3.3. 

35. 

36. 

To  ensure  maximum  public  awareness,  Member  States  concerned  have 
communicated  the  availability  of  such  "rescue"  offers  via  national  government 
websites. 

19 

20 

AEA  (Association  of  European  Airlines),  ELFAA  (European  Low  Fare  Airline  Association),  IATA 
(International Air Transport Association) and ERAA (European Regional Airlines Association) 
Aeropuertos Españoles y Navegación Aérea 

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4. 

37. 

38. 

39. 

CONCLUSIONS 

The  Commission  is  conscious  of  the  impact  on  passengers  of  airline  failure  and  in 
particular on stranded holders of flight-only tickets. 

The Commission would draw to the attention of Member States and stakeholders that 
Regulation  (EC)  No  261/2004  already  provides  an  appropriate  legal  framework  for 
passenger assistance in cases of insolvency. However, experience has shown that this 
Regulation  can  be  difficult  to  enforce  where  an  air  carrier  is  closing  down  its 
activities unless, using Regulation (EC) No 1008/2008, a carrier has been required to 
plan  ahead  and  put  in  place  measures  to  protect  passengers  should  it  lose  its 
Operating Licence. 

The  Commission  has  identified  that  proactive  engagement  by  national  regulatory 
authorities can significantly improve the situation for affected passengers. Therefore, 
before deciding to propose new legislation in this area, the Commission considers it 
essential  to  strengthen  the  licensing  oversight  of  EU  air  carriers  under  Regulation 
(EC) No 1008/2008. 

40. 

The Commission will therefore: 

• 

• 

• 

• 

• 

• 

• 

the  national  authorities  competent  for 

Encourage 
the  enforcement  of 
Regulation  (EC)  No  1008/2008  and  Regulation  (EC)  No  261/2004  to 
coordinate  their  actions  to  ensure  appropriate  monitoring  of  the  financial 
position  of  air  carriers  and  where  necessary  adopt  a  coordinated  approach  to 
the suspension of their operations to minimise the impact on passengers; 

Encourage  greater  cooperation  and  sharing  of  best  practice  and  information 
between the regulatory authorities of Member States; 

Engage  with  EU  air  transport  associations  to  formalise  the  existing  voluntary 
agreements on the provision of rescue fares and their effective promotion; 

Engage  with  EU  airport  associations  to  develop  voluntary  arrangements  to 
complement  "rescue  fares"  for  example  offering  reduced  airport  charges  in 
such situations to minimise the costs to passengers;  

Engage with industry to encourage the wider and more systematic availability 
of SAFI or similar insurance products across the EU; 

Engage with IATA to encourage the adoption of a service level agreement to 
ensure  that  the  Billing  Settlement  Plan  (BSP)  is  used  to  ensure  the  largest 
possible number of passengers recover what they paid before an air carrier is 
declared insolvent; 

Encourage  the  wider  and  more  systematic  availability  of  information  about 
credit  card  refund  schemes  or  similar  products  in  a  Member  State  to  allow 
passengers to protect themselves against the risk of insolvency under national 
law. 

41. 

The Commission will closely monitor the application of these measures. Two years 
after  the  adoption  of  this  text,  the  Commission  will  review  their  performance  and 
effectiveness  and  assess  whether  a  legislative  initiative  is  needed  to  guarantee  the 
protection of passengers in the case of airline insolvency.  

EN 

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   EN