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3 April 2020

Passenger Ticket Refunds During COVID-19 Crisis

In this time of profound crisis, the hearts and thoughts of everyone at IATA are with those on the front line performing heroic efforts to heal the sick and stop the spread of COVID-19. The necessary steps to do this are painful—with vast parts of the planet under varying degrees of lockdown.

The COVID-19 crisis is a human and health tragedy. It has also become an economic crisis.

The world faces a sharp and deep recession as economic activity slows. Nowhere is this more visible than in the rows of airplanes parked at airports with nowhere to go. A thriving industry, connecting the world with 4.5 billion passenger journeys and transporting 60 million tonnes of freight a year, has been brought to a shuddering halt.

Aviation is fully behind government efforts to fight this contagion. But that has severe consequences for the airline industry, the 2.7 million people who are directly employed by airlines, and the 65.5 million jobs in the value chain that aviation supports.

There is very little money coming into the industry. And with two million flight cancellations already, a huge number of travelers have had their trips disrupted. Airlines are doing their best to find solutions for their customers. But in this totally unprecedented situation, there are no easy solutions.

Every day there are stories in the media about airline layoffs. And behind the scenes airlines desperately are trying to preserve jobs and stay solvent. 

But there is a very harsh economic reality setting in. Airlines cannot cut costs fast enough. And with the $35 billion owed to travelers for flights that could not or cannot take place, airlines face an imminent depletion of the cash they need, not just to maintain employment, but ensure that they will be around to support the economic revival when the COVID-19 crisis is over.

Passengers have the right to get their money. They paid for a service that cannot be delivered. And in normal circumstances, repayment would not be an issue. But these are not normal circumstances. If airlines refund the $35 billion immediately, that will be the end of many airlines. And with that an enormous number of jobs will also disappear.

So what’s to be done?

The simple answer is that airlines need time. And that is why I am supporting airlines (and our partners in the travel and tourism sector) in their request for governments to delay the requirement for immediate refunds. We propose vouchers that could be used for future travel or refunded once we are out of this crisis period. This would buy the industry vital time to breathe—surviving the crisis so that they are ready to fly when better days arrive.

That’s our proposal to travelers. But it is not just their understanding that we need. Our travel agent partners are caught between the airlines and consumers. We are reaching out to them to create a structure for managing a voucher system that will be good for consumers, agents and the airlines.

I know that this is far from ideal. But the alternative is even worse. Without this flexibility, airlines will collapse, and jobs will disappear. Accepting a voucher or delayed refund today will mean that the airlines will be around for when we have our freedom to travel restored.

I wish you all, wherever you are, health and comfort during this very difficult time. Stay strong.

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