European Court of Auditors criticizes EU states for disregarding passenger rights

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Passengers in Frankfurt am Main

Photo: Martin Sylvest / AFP

The EU Court of Auditors accuses the governments of the EU countries of having acted very unilaterally in favor of the airlines during the corona crisis.

In order to save the industry from a wave of bankruptcies, the member states provided the airlines with tens of billions of euros in taxpayers' money, but failed to protect the rights of passengers.

As a result, millions of passengers were deprived of their right to reimbursement of the flight price, according to a special report by the Court of Auditors, which was submitted to SPIEGEL in advance.

According to the report, the EU countries have spent a total of 35 billion euros in public money to save the airlines.

Lufthansa alone received more than six billion euros, Air France and KLM together even more than eleven billion.

More than one billion each went to TUI, TAP and SAS.

However, the governments did not make the payment conditional on the airlines reimbursing passengers for the ticket prices for canceled flights - although this is applicable law and, according to the Court of Auditors, the EU Commission has expressly pointed out this possibility.

"The rights of passengers have been largely ignored," criticized Annemie Turtelboom, the Belgian member of the Court of Auditors responsible for the report.

"They practically became the airlines' banks, keeping their money in their accounts."

Billions in taxes from the state, interest-free loans from customers

Often passengers were forced to accept vouchers instead of the refunds due to them - and thus to give the airlines practically interest-free loans. But that's not all: the vouchers are usually not protected against bankruptcy of the airlines, and neither is it guaranteed that they are suitable for a connection like the one originally planned. "It is remarkable that the governments accepted this, even though it violated EU law," said Turtelboom.

The auditors do not criticize the aid to the aviation industry itself, as the pandemic hit them particularly hard. The number of flights in the EU fell by 88 percent in April 2020 compared to the same month last year - which puts all other crises in the shade. After the terrorist attacks of September 11, 2001 in the USA, air traffic in the EU fell by only around two percent; in the financial crisis of 2009 it was less than seven percent.

In addition, aviation plays a key role in the EU economy: in 2018 it had almost 2.7 million employees in the EU - at the time including the UK -, the industry supported 13.5 million jobs and economic activity worth 840 billion euros generated.

This corresponded to 3.6 percent of employment and 4.4 percent of gross domestic product.

EU Commission approved aid at record speed

Nevertheless, the governments should have respected the rights of passengers more, as the Court of Auditors criticized. Passengers are said to have been inadequately informed about their rights and have been forced by the airlines to accept vouchers. 15 of the 27 EU countries, such as France, the Netherlands and Belgium, even took special measures to exempt airlines and package tour operators from the obligation to reimburse.

The EU Commission - whose task is actually to monitor compliance with EU law by the member states - initiated infringement proceedings against ten states in June 2020 for violating passenger rights and recently even sued Slovakia before the European Court of Justice. But the authority headed by Commissioner Ursula von der Leyen was even quicker to wave the state aid to the airlines: They approved a total of 54 resolutions, 23 of them within a week alone - a "record pace," as the Court of Auditors notes.

His conclusion is clear: "The current legal framework for the protection of air passengers' rights is incomplete and not crisis-proof." An improvement has been planned for years.

After the eruption of the Icelandic volcano Eyjafjallajökull in April 2010 led to the cancellation of around 110,000 flights in the EU, the Commission proposed an amendment to the regulations in 2013.

Complaint procedures should be improved, the means to enforce passenger rights should be strengthened - "exactly what we would have needed in the corona crisis," says auditor and traffic expert Luc T'Joen.

Suggestions for improvement have been stuck for years

The EU Parliament supported the proposal, but not the Council of Member States - where the legislative package has been stuck since then. The Court of Auditors is now calling for an improvement in the situation: passengers should be better informed about their rights and "EU law should be implemented to the letter, even in times of crisis," as Turtelboom emphasizes. In addition, the EU Commission should find “pragmatic solutions” to help airlines and - probably the most important requirement - “make state aid dependent on passengers being reimbursed the ticket price for canceled flights”.

Sure, the member states and not the EU are responsible for air passenger rights, says T'Joen. But the EU must ensure that the national authorities get the necessary data from the airlines - which is currently not the case. "Nobody knows how many claims passengers have on which airline." After all, the member states are now increasing the pressure on airlines to repay passengers their money. "If that happens," says T'Joen, "no one will end up empty-handed."