A travel agency group is calling for EU law to be changed after a Belgian airline was liquidated last month, leaving “thousands unlikely to receive refunds”, and putting the financial burden on travel intermediaries.
Air Belgium, a cargo airline that used to run passenger flights, has been taken over by a shipping company after the company fell into financial hardship and was liquidated.
The airline announced on 30 April that a business court has approved CMA CGM group, which has deals in sea, land and air logistics, to take over the airline’s cargo operations.
As a result, the airline was placed into liquidation by the same court that approved the takeover.
CMA CGM will continue to focus Air Belgium’s activities on air freight, meaning 124 jobs, including 74 pilots, will be preserved.
Meanwhile, other travel industry players have been left unsatisfied by how Air Belgium’s bankruptcy was handled.
The European Travel Agents’ And Tour Operators’ Association (ECTAA) released a statement on 15 May demanding urgent airline insolvency protection, claiming the bankruptcy has exposed travel agents, tour operators and customers to millions in losses.
The association said the liquidation of Air Belgium has “left nearly €8 million in outstanding passenger refund claims, of which more than €5 million was sold through travel intermediaries (travel agents and tour operators).”
The airline initially ceased all scheduled passenger flights in September 2023 and shifted towards cargo and charter operations.
At the time, Air Belgium said that passengers who had flights cancelled would be reimbursed “as a matter of priority in the scope of the proceedings.”
However, now that Air Belgium has gone bankrupt, the ECTAA said “thousands of passengers are unlikely to receive refunds for their cancelled flights, with the remaining claims now part of the bankruptcy proceedings.”
In a statement on the company’s liquidation, Niky Terzakis, CEO of Air Belgium, said: “Of course, we would have preferred a different outcome for our passenger operations, which impacted some of our employees and customers.
“However, this transfer was the only viable option after all other rescue paths were explored.”
The ECTAA explains that when a travel intermediary sells a flight ticket as part of a package and the airline goes bankrupt, the package organiser is required by law to provide an alternative ticket to customers.
However, there is no real prospect of recovering the original funds from the insolvent airline. “This places an unfair financial burden on travel intermediaries, who are left to absorb the losses caused by airline failures,” it said.
Air Belgium’s liquidation has coincided with the Council of the European Union’s recent discussions around the revision of the Air Passenger Rights Regulation.
Due to this, the ECTAA is currently seizing the moment and urging policymakers to include measures guaranteeing the refund of ticket prices when flights are cancelled due to an airline ceasing operations or going bankrupt.
Frank Oostdam, President of ECTAA, said: “The Air Belgium bankruptcy is yet another stark reminder that the current system leaves both consumers and travel intermediaries exposed to unacceptable risks.
“Airlines must be required to provide financial guarantees to cover their liabilities in case of insolvency.”
Mr Terzakis, CEO of Air Belgium, also explained why Air Belgium has struggled to survive and its move to being taken over by the shipping giant.
“Since its creation, Air Belgium has had to face a series of challenges, including several years of global crises brought on by COVID-19, the war in Ukraine, and others,” he said.
“The company took every necessary measure and did all it could to ensure its survival, despite the many obstacles. I am extremely proud of our staff for their loyalty, expertise, energy, and unwavering commitment.
“This is exactly what CMA CGM Group recognised in choosing to trust us with this takeover. CMA CGM is a dynamic and ambitious group with a strong position in the market. I believe our team will be an added strength.”
“The successful completion of this transfer was also made possible thanks to the cooperation of all stakeholders, including trade unions, the relevant Belgian authorities, suppliers and clients.”
“The preservation of jobs linked to cargo operations and the development of freight activities from our country offer encouraging prospects for the future and represent good news for the Belgian aviation sector.”
The UK’s Civil Aviation Authority states that if you have booked flights or a trip that includes flights with a travel firm that holds an Atol (Air Travel Organiser’s Licence), the travel firm is responsible for your flight arrangements.
It must either make alternative flights available for you so that your trip can continue or provide a full refund.
If you are abroad, you should make arrangements to bring yourself home at the end of your trip.
In terms of travel insurance, airline financial failure or insolvency is rarely included on most policies, so it is important to check if your package is Atol protected.
The Independent has contacted Air Belgium for comment.
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