Update 15 May 2020: Things have gone fast over the past few days in the discussion about temporarily tolerating the issuing of vouchers for cancelled airline tickets, rather than offering refunds. In a communication dated 13 March 2020, the European Commission ticked off a number of Member States and for a brief moment, it also seemed to be threatening to initiate “infringement proceedings” before the Court of Justice of the European Union (also referred to as “proceedings for failure to comply”, or “infraction proceedings”). According to the Commission, passengers should always be given the choice between a voucher and a refund, especially at a time when not only businesses but also consumers experience financial difficulties due to the corona crisis. Whereas Prime Minister Rutte initially indicated that, for the time being, the Netherlands would continue to allow travel organisations and airlines to issue vouchers, the Minister of Infrastructure and Water Management, Cora Van Nieuwenhuizen-Wijbenga, announced yesterday (14 May 2020) in a letter to the Dutch House of Representatives that she had decided to withdraw her previous “instruction” to the Human Environment and Transport Inspectorate (ILT) to temporarily not enforce the obligation to pay refunds pursuant to Regulation No. 261/2004. This means that consumers must still be able to get their money back within 7 days after their flight is cancelled (Article 8 Regulation No. 261/2004).
The European Commission's recommendation (also of 13 March 2020) shows that consumers are free to accept a voucher voluntarily, as they were before the corona crisis. The Commission also encourages consumers to accept vouchers given the current situation, but stresses that vouchers must offer an attractive and reliable alternative. Among other things, they must be protected against possible insolvency of the airline and must be convertible into cash after no more than one year (12 months). The Commission therefore encourages Member States to consider setting up a guarantee scheme, a move that the Dutch Consumers’ Association, the ANWB motorists organisation, and the Netherlands Authority for Consumers and Markets (ACM) had already advocated. Minister Van Nieuwenhuizen-Wijbenga has indicated that she will continue to press for a European guarantee fund. But because of the exceptional situation created by Covid-19, she is also encouraging passengers to accept the vouchers offered by airlines if doing so is not financially difficult for them.
The recommendations by the European Commission are not mandatory. However, the rapidity of the Dutch Government’s about-turn and its decision to withdraw the earlier instruction to the ILT to temporarily tolerate the issuing of vouchers are illustrative of the authority that those recommendations enjoy.
The COVID-19 (coronavirus) outbreak and the resulting travel advisories and bans have had a catastrophic effect on airlines worldwide. Most commercial flights have been cancelled, and there is great uncertainty about the future of air travel. Due in part to a lack of revenue, airlines do not have sufficient funds to refund all cancelled airline tickets in the short term.
In a Memorandum to Parliament (30 March 2020), the Dutch government announced that it will temporarily tolerate the issuance of airline vouchers for coronavirus-related cancelled flights, in lieu of a refund within seven days. Normally, such vouchers are prohibited pursuant to Regulation (EU) No 261/2004, which also provides for a right to compensation for delayed flights, according to the Court of Justice's Sturgeon judgment. It should be noted that the Regulation applies only to flights departing from or landing in the European Union.
Minister for Infrastructure and Water Management Cora van Nieuwenhuizen-Wijbenga has therefore instructed the Human Environment and Transport Inspectorate (ILT) to temporarily refrain from enforcing the reimbursement obligation arising from Regulation 261/2004 if an airline – due to the coronavirus crisis – systematically issues vouchers in lieu of reimbursement. In doing so, the minister is making use of her statutory power to issue instructions to a national inspectorate (Instruction 14(1) of the Instructions to National Inspectorates accompanying the Rules on the Issuance of Instructions to National Inspectorates). The ILT, which falls under the minister's responsibility, is required to follow her instructions.
This exception only applies if:
- the voucher is valid for no more than twelve months;
- when the voucher expires, any unused portion is redeemed for cash; and
- the airline takes the initiative of making the payment.
Airlines must communicate clearly (and in a timely manner) with their customers about this arrangement.
The minister has announced that her instruction (aanwijzing) will shortly be laid down in a policy rule, which will enter into force on the date of its publication in the Staatscourant, with retroactive effect as from 1 March 2020. The exception will (initially) apply until 30 June 2020. Depending on how the crisis unfolds, the minister will assess whether the exception should be extended.
From a legal point of view, this is a remarkable move as there has been very little tolerance in this area in the Netherlands in recent decades. After all, a general duty to enforce applies to violations of the statutory rules, including outside the context of zoning law. This is all the more relevant when it comes to the effective enforcement of mandatory provisions of European law, given the principle of “sincere cooperation” within the EU (Unietrouw) (Article 4 TFEU). In that respect, the relevant question is whether this tolerance will hold up if challenged by consumers (or consumer organisations) before the Court of Justice (CJEU). It is understandable, however, that the minister did not wait for the European Commission to come up with an arrangement. After all, it took weeks for the Commission to (temporarily) adapt the “historic rights” provisions of the Airport Slots Regulation in order to prevent empty aircraft from taking off and landing for the sole purpose of maintaining their entitlement to slots.
Although the arrangement has been welcomed by the aviation industry, many organisations, including the Dutch Consumer Association, the Royal Dutch Touring Club (ANWB) and the Netherlands Authority for Consumers and Markets (ACM), have been critical of its conditions. The Consumer Association and the ANWB have also noted a sharp decline in consumer confidence due to insufficient oversight of compliance with the tolerance arrangement. The Consumer Association and the ANWB wrote to the minister about this on 14 April 2020.
The biggest objection raised by the Consumer Association, the ANWB and the ACM is that, under the current conditions, passengers bear the risk of their voucher becoming worthless if the airline becomes insolvent, which is not inconceivable in the present circumstances. They are therefore calling for the establishment of a fund whereby the government or a third party would guarantee the reimbursement of airline tickets in the event of the airline's insolvency.
It remains to be seen whether the government will agree to this condition. The Consumer Association already advocated in November 2019 for a guarantee fund for airline tickets (such as the one that already exists for package holidays), but its proposal was rejected by the minister on 12 March 2020.
The Consumer Association and the ANWB also consider the twelve-month period after which travellers can redeem their voucher for cash to be too long. A period of six months, as applied by package holiday tour operators, ought to be sufficient.
The ACM stresses that all sectors (thus not only the aviation sector) in which vouchers are offered for products or services consumers have already paid for (or paid a deposit for) must constitute a genuine replacement: the voucher must be valid for an equivalent or genuinely similar product or service at a later date. In the case of airline tickets, it would be logical to assume that this means comparably priced tickets.
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