The German government has endorsed Lufthansa’s argument that it cannot survive if it must issue refunds for cancelled tickets.
Just last week the European Commission re-affirmed regulation that mandates airlines to promptly refund tickets for flight cancellations. Lufthansa, among others, has dragged its feet, arguing that it simply cannot afford it.
As demand continues to sink for flights, Lufthansa faces the same survival dilemma that others face: withhold refunds or run out of cash Bloomberg reports the carrier is thought to have €5.1 billion cash on hand and €4 billion in used ticket liability. If it were forced to refund that money, Lufthansa would run out of cash in 25 days.
With the German government now examining a bailout for Lufthansa, it wants the European Commission to allow airlines like Lufthansa to issue vouchers instead of cash. Thus far, Brussels is still insisting upon cash refunds and may levy fines against carriers who do not comply. But, the German request is currently under consideration.
Germany is exploring bailouts and loans to various companies and industries surpassing one trillion Euros across the German economy and wants to mitigate its direct risk concerning Lufthansa. It insists that mandatory refunds “threaten to bankrupt companies”.
Lufthansa, of course, applauds the efforts of the German government, also insisting that during this “exceptional time” refunds are simply not possible.
CONLCUSION
Count me as disappointed that Germany would take Lufthansa’s side in a move that negatively impacts consumers. It’s not like Lufthansa is the only entity suffering in this new world…last I checked, many consumers are as well. The move must come as a double-whammy to German taxpayers, many of whom will not receive refunds on cancelled tickets and then have their pockets fleeced via tax dollars by the very same airline.
With Canada and now Germany pushing for vouchers over refunds, will this be the new global trend?
> Read More: The Existential Airline Dilemma: Refund Or Survive
image: Lufthansa
Let’s not forget. They are actually not providing the goods they promised, flight. It’s common sense contract law. Anything else is just state-sponsored fraud.
Hi. I just like to get some information if anybody knows if online travel agencies can charge cancellations fees even when airlines are giving full refunds and waiving all fees. Ovago travel agency is doing this right now $100 per ticket.. Even if we would like to take vouchers, ovago said they would charge up to 400$ per ticket wjen you rebook using the vouchers. Any feedback would be appreciated. Thank you
Don’t waste your time. Chargeback with your credit card company. That is absurd and illegal.
We were forced to rebook a Lufthansa return flight from Greece to US last month. Not only did they upcharge us $344 each for return flight (same service class), they also charged us another $300 rebooking fee. They’ve denied a refund on the rebook despite what’s plastered all over their website. Will NEVER use them again. They can go under for all I care.
So, apparently Governments are defending airlines by standing with them and defending fraudulent practices under the guise of “it will destroy them otherwise.”
Under this scenario it sets a precedent that any business can effectively refuse to pay anyone due payment under contract given Covid19.
Extraordinary times, indeed.
Let’s see how much they paid their execs and board members? Have they suspended pay or bonuses?
The fact that so many other companies have cash reserves – and some quite significant – and the airline industry doesn’t is really staggering. Have they drawn down all of their credit lines? I mean while not the legal definition of a Ponzi scheme, you really have to wonder.
https://investor-relations.lufthansagroup.com/en/corporate-governance/compensation.html
Most businesses are a Ponzi scheme in some form or another. These times will expose that to a degree we have never seen before.
Take home contractors as an example. They get your often 50% deposit, start to work and get maybe 10% of the way through and vanish for a time. Why? Because they then go get ten more jobs and get those deposits as well. Keep everyone’s cash to use as you slowly show up occasionally to give the appearance of working to finish. Not to pick on contractors but it strikes me as a good example.
I know this is off topic, but, I like the picture you used for this article…impressive!
Deals We Like published a great little piece on filing formal complaints with the DOT.
You’re owed a full cash refund if your flight is cancelled and not provided an alternate. Since many flights aren’t going out AND an alternate is not possible, well that’s the airlines problem and shouldn’t be yours. You’re owed a full refund. All airlines need to be held accountable just like any other business. When times are good they try and screw the passenger so this is our time to hold them accountable
per DOT “U.S. and foreign airlines remain obligated to provide a prompt refund to passengers for flights to, within, or from the United States when the carrier cancels the passenger’s scheduled flight or makes a significant schedule change and the passenger chooses not to accept the alternative offered by the carrier. The obligation of airlines to provide refunds, including the ticket price and any optional fee charged for services a passenger is unable to use, does not cease when the flight disruptions are outside of the carrier’s control (e.g., a result of government restrictions).”
File that formal complaint and if there are enough against an airline then they might cave from the pressure. Or simply take legal action against them since they are blatantly breaking the law as it is written
HECK NO!
The EC needs to stand firm here, even against Germany. If consumer rights mean anything in the EU, customers must get a refund.
So a contract is a contract unless Lufthansa wants to keep your money. Sounds fair. Consumers should absolutely be individually responsible for propping up multi-billion dollar corporations while those same consumers are taking financial hits elsewhere. One of the ironies here is that the German government is a huge stickler for rules except when it’s inconvenient for the flag carrier. How about shareholders taking the first round of hits rather than the public, since the shareholders actually chose to invest in Lufthansa while the poor saps who bought tickets are the proverbial deer in the headlights?
What’s even more galling is that world governments, including Germany’s, are forcing who knows how many LH customers (both businesses and individual) into financial ruin by declaring their jobs “nonessential” and therefore making their livelihoods illegal. And now they expect them to give airlines like LH interest-free loans, with cash they can ill afford to be without. This has to stop. Bail the airlines out if you must but get that cash back to the customers who need it.
It’s annoying that Lufthansa has not refunded our money, but their refusal to communicate compounds the problem. Any suggestions about how to get their attention?