ELFAA calls for better oversight to prevent airline failure

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15-Oct-2009 ELFAA members question need for mandatory airline failure fund.

Yesterday the European Low Fares Airline Association held its Annual General Meeting in Brussels. The event hosted Brian Simpson, the Chair of the European Parliament’s Committee on Transport and Tourism as keynote speaker. A central issue discussed was the consumer’s protection in case of airline bankruptcies.

MEP Brian Simpson said: “Our concern is to deal with the problem of stranded passengers in case of airline failure. We have asked the Commission to find a solution which involves all stakeholders from airlines to regulatory bodies in the Member States”.

Indeed, proposals going in this direction are currently being discussed within the Commission and the European Parliament is preparing to adopt a Resolution addressing the issue.

However, Mr. John Hanlon, Secretary General of the ELFAA called upon regulators to establish a preventive mechanism with closer oversight and financial monitoring of companies showing signs of financial distress rather than imposing a compulsory and costly protection on customers.

“It is a matter of preserving consumer’s choice and purchasing power” Mr. Hanlon insisted. “Low-fare airline customers are overwhelmingly purchasing via the web where they are offered insurances that cover airline failures as an option. Moreover, payments by credit card often offer additional protection. Finally, in case of failure of their carrier within Europe, customers have always been offered rescue fares by ELFAA members at nominal fares.”

As a consequence, many customers exercise their right of choice not to take out such insurance. Mr. Hanlon concluded “A mandatory protection mechanism would impose an unfair burden on ELFAA’s customers and hamper their ability to provide the best service at the lowest price possible.”