Airlines pressured to issue refunds

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Norwegian aviation authorities are finally adding to the pressure on airlines to refund tickets for flights that were cancelled. Scandinavian Airlines (SAS) and Norwegian Air stand accused of breaking a law that orders them to refund flight cancellations within seven days.

Dark days for the airlines have led to a lack of refunds for cancelled flights, but now Norwegian authorities are calling on SAS, Norwegian Air and Widerøe to follow the rules. PHOTO: Samferdselsdepartementet/Olav Heggø

Thousands of customers along with travel agents and tour operators have instead been waiting for months to get their money back, following mass flight cancellations since the Corona crisis began earlier this year. Several have accused the airlines, especially SAS, of intentionally switching over from an automated refund system to a manual system that takes much more time. That way, claim frustrated travel agents, SAS and other struggling airlines could keep sitting on customers’ cash when their business otherwise disappeared overnight. Both SAS and Norwegian have been struggling to survive.

“We of course all understand that the airline industry is in crisis,” Per Arne Villadsen, managing director of the Berg-Hansen travel bureau chain in Norway, told newspaper Dagens Næringsliv (DN) on Thursday. “But I think it’s very strange that the airlines can exhibit this collective behaviour where they’re holding back money from consumers and the rest of the travel industry without the authorities lifting a finger. This puts all of us in a difficult situation.”

‘Broke their own rules’
Astrid Bergmål, leader of the employers’ organization Virke that represents many businesses in the travel industry, has also been complaining. “The airlines have broken their own (refund) rules and those of the EU,” Bergmål told DN. “The fact is that the airlines chose to switch from an automated refund system to having to handle each customer refund manually. It’s difficult to pin that on anything other than the airlines’ desire to hold on to their customers’ money over a longer period.”

Now the aviation authority in Norway (Luftfartstilsynet) is finally taking action after being flooded with complaints. DN reported Wednesday that it has sent letters to SAS, Norwegian Air and domestic airline Widerøe pointing to all the complaints, and demanding that the airlines use the resources necessary to meet refund demands.

The airlines have until July 17 to clarify how many unsettled claims they still face, when they will be handled and what measures have been taken to make sure refunds are issued “as quickly as possible” and in line with regulations.

“We are now waiting for response from the airlines and will then evaluate what further steps may be necessary,” Nina Vindvik, legal director at Luftfartstilsynet, wrote in an email to DN. She added that the regulators fully understand how the lack of refunds has “created problems for both passengers and other players in the travel industry,” and that the aviation authority would be following the situation closely as both SAS and Norwegian resume more flights this month.

‘Capitalizing on misery’
Bergmål said she was glad the authorities were finally cracking down, while Villadsen thinks they could have done a lot more earlier. He accused the airlines of “capitalizing on misery” by ignoring consumers’ rights. He also believes the airlines’ practice will end up hurting them, and not just in terms of bad will. He thinks many would-be travelers have hesitated to book new airline tickets because they don’t know when they’ll get their money back if future flights are cancelled, too. Others simply can’t afford to book new flights until they get their money back from those that were cancelled.

DN reported how KLM/Air France has now changed its own practice and was due, from July 1, to resume pre-Corona refund systems. Officials at both SAS and Norwegian, however, warned that their passengers holding tickets for flights that were cancelled will still need to be patient.

‘Unfortunately taking a long time…’
“The authorities are fully aware of the situation the airlines are in as a result of the Corona pandemic,” SAS spokesman John Eckhoff told DN. “Aviation is especially hard-hit and it will take a long time to return to a more normal situation. It’s unfortunately taking a long time to handle the record-large number of refund claims, both for private customers and the travel agencies.”

He declined comment on the complaints of both the travel agents and employers’ organization, nor would he reveal how SAS will respond to the authorities’ letter. Andreas Hjørnholm at Norwegian Air also warned that refunds will take longer than normal, but he claimed the airline had adopted several measures to speed up the process. The goal, he said, was to return to the seven-day refund requirement.

If the airlines fail to satisfy the authorities’ demands, they can face fines and other sanctions to be evaluated after they’ve sent in their response.

SAS, meanwhile, has collected the equivalent of SEK 14 billion in new capital provided by its major investors and the governments of both Sweden and Denmark. Norway did not participate in the latest round of financial aid to the airline, nor was it willing to return as an owner of SAS itself, but it has chartered flights to maintain domestic airline service during the crisis and has offered to guarantee new loans.

“We’re grateful for that,” SAS’ chief executive, Rickard Gustafson, told DN this week, “but we can’t finance ourselves just by taking on more debt.” The airline also terminated another 1,600 employees in Denmark alone this week.

NewsInEnglish.no/Nina Berglund