Air Carrier Insolvency

Stakeholder hearing on Air Passenger Rights

Brussels, 28 June 2010Hans De Coninck

Belgian Consumer Association Test-Achats

Hearing on APR, 28/6/2010 2

Summary

1. Assessment of the current situation2. Assessment of the current legislation3. APR and the review of the PTD4. Many options vs. few real solutions5. Proposals by Test-Achats and BEUC

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I.Assessment of the current situation

• Growing risk of insolvency• Prepayment by consumers

longtime before the flight• Growing direct selling and

marketing by airlines• Airlines and portalsites offering

« dynamic packages »• European vs. other destinations.

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II.Assessment of the current legislation

• Reg. 1008/2008 appears to be insufficient (e.g. SkyEurope), and ineffective ( e.g. MyAir ); possible conflict of ( national) interests…

• Reg. 2111/2005 : info on the operating airline is not useful in this context (e.g. codeshare);

• EP Resolution 25 Nov. 2009 confirms the need for new legislation.

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III.APR and the current review of the PTD

• Art.7 of the PTD 90/314 could already apply to airlines when selling a « travel package » :«The organizer and/or retailer party to the contract shall provide sufficient evidence of security for the refund of money paid over and for the repatriation of the consumer in the event of insolvency »(also:ECJ, C-400/00);

• Discrimination between tour organisers and « dynamic » airlines;

• Discrimination between « package traveller » and « seat only traveller »;

• Inspiring results of the PTD-consultation and stakeholders hearing 22/4/10.

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IV.Many options vs. few effective solutions

• Report Booz&Co, Jan. 2009: 5 options (1)strenghten the current rules;(2)airline self-insurance;(3)consumer self-insurance;(4)general reserve fund;(5)national bankruptcy laws;

• Option 6: « Maximum(Plus) » review of the current PTD into a « Travel Directive »(=options 7 and 8 of proposed policy options by the Commission, April 2010);

• Option 7:release of blocked payment when flight takes place (cfr BSP by IATA).

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V. Consumer Proposals

• Aiming at effectivity,solidarity, proportionality, subsidiarity and better protection of passengers flying with EU airlines;

• Compulsary ( insurance ? )cover, similar to the PTD ( art 7), included in the upfront price and aiming at reimbursement and repatriation; limited impact on prices;

• Possible targeted harmonization, inspired by best practises under the PTD ( e.g. Austria and Denmark);

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V. Consumer Proposals (2)• Possible widening of insurance

requirements under Reg. 785/2004 and Reg.2407/92;

• Possible additional rules based on « mutual responsability » concerning stranded passengers ( e.g. airlines flying in the same direction with available seats, assistance, rerouting, early release of blocked airplanes,…).

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Thanks for your attention !

www.test-achats.beE-mail : hdeconinck@test-aankoop.be