Lufthansa refunds reach a massive €3 billion

by AirlineRatings editors
October 05, 2020
lufthansa refunds
Photo: Lufthansa

New figures released by the Lufthansa Group underscore why some airlines tried desperately to steer passengers away from refunds and to instead convince them to accept flight credits.

The German aviation giant revealed it had paid 3 billion euros ($US3.52 billion) in refunds as of September 30 to more than seven million customers, adding to the giant hit it was already taking to its bottom line.

It said the number of ticket refunds still open fell to about 700,000 transactions worth about 350 million euros but it doesn’t expect the problem to go away soon.

READ: Resources boom has Perth Airport clogged for take-off.

This was despite increasing capacity to allow it to process 1700 applications an hour.

“Constantly changing travel restrictions and current political decisions are forcing Lufthansa to make frequent and extensive changes to flight schedules at short notice,’’ it said.

“This leads to unavoidable flight cancellations. The associated refund applications are processed as quickly as possible. Therefore, the number of open refund applications will continue to develop dynamically, decrease further in the coming weeks, but will not reach zero.”

READ: Will Malaysia Airlines be the next COVID victim?

The airline group said it was working “continuously and defensively” to further speed up processing through a range of measures that include tripling capacity at customer centers and quadrupling it for travel agency sales.

“Numerous employees from other departments have been activated to provide support and have been released from short-time working in return,’’ it said.

“Currently, around 1,700 applications per hour can be processed.”

“Customers can also flexibly adjust their travel plans.

“All fares of Lufthansa, SWISS, Austrian Airlines and Brussels Airlines can be rebooked as often as required without incurring charges. This applies worldwide for new bookings on short, medium and long-haul routes.”

Earlier this year, Lufthansa reported a first-quarter net loss of 2.1 billion euros ($US2.3 billion) and said it expected more job losses as an estimated 300 aircraft remained parked in 2021 and 200 in 2022.

More widely, refunds have been a vexed issue for many passengers dealing with long delays and facing airlines keen to minimize their cash burn at a time revenue and passenger traffic has slumped.

Refunds are covered by the conditions of carriage, which vary between ticket types and airlines, but many jurisdictions require that passengers be given a choice between a credit and a refund if an airline cancels a flight.

Australia’s competition watchdog took Qantas to task after receiving hundreds of complaints from passengers who were given credits by the airline after their flights were suspended or canceled due to travel restrictions instead of the refunds to which they were entitled.