Germany pushes for ‘pay as you fly’ model
businesstravelnewseurope.com
businesstravelnewseurope.com
Right now if your EU flight is cancelled you're entitled to a monetary compensation[1] on top getting your ticket money back. I worry that letting the airlines simply not charge you will allow them to wiggle out of this, or make the process to get it even more Byzantine than it already is.
[1] https://europa.eu/youreurope/citizens/travel/passenger-right...
A business that rejects customers willing to pay top dollar is suboptimal. The startegy today is to make artificial scarcity. If the customer has more power the strategy changes.
I flew Munich-Oslo yesterday. Look at the prices for that route for later today, for next week and for next month. The seats are the same on most of the aircraft, the available business class you see is just regular seats being kept free for expensive tickets. And when the search engine says "4 seats are left at this price", that means that the airline is keeping some to sell at higher prices.
Currently if an airline drops you, demanding compensation is a cumbersome process but you can get it. So, e.g., if a flight was booked by too few passengers, the airline has an incentive to still honor the booking.
With this system they might as well say "today numbers don't add up so we just don't fly", and cancel with any excuse.
The airline has a duty to fulfil the contract once it has entered into the contract. That duty applies both before and after the payment due date (or payment dates, in many contract).
For example, phone sales can't be final at that time, there has to be a 14-day grace period starting from when the purchase agreement is accessible to both parties (IIRC). Mail-order vendors have to accept returns on most kinds of goods, by law not by convention. Warranties cannot be shorter than a specified limit. Apartment rental contracts cannot ban having children, and so on and so forth.
The restrictions are real, even if most of a typical contract is still free to design and write by the parties.
This suggested change isn't larger than many of those, or groundbreaking. It's just another one like those.
Yes, I know. I grew up in Germany. That these restrictions are common doesn't make them any better.
Or is this another message from a fantasy universe where customers negotiate contracts with major corporations?
If I don't like the Cheeseburger at McDonald's, I just go eat elsewhere. No need to regulate the taste of cheeseburgers, nor exactly how many pickles or what kind of cheese should be on them.
You'd do the same with airline contracts. And people already do that, for the all the conditions that are not regulated.
Basically every airline offers the same terms, conditions and services. If you want to know what's coming industry-wide in 3 years, just keep an eye on what the most regressive is doing today.
(As a customer, I only care about stuff that actually affects me. Checking what's written in the contracts and official terms-and-conditions is at best a means to an end; especially since I am unlikely to go out and actually sue anyone. Mostly, I'll just avoid airline X, if I hear that other people are having trouble with them.)
BA is a perfect example - a few years ago it was an OK airline, but it has chased the policies of RyanAir (even hiring their CEO!) to the point where they are a complete shit show.
You’re pretending there is a market where consumers have input where no such thing exists.
Honestly this sounds like a point to address in addition?
I'm pretty sure I already give a mailing address to airlines upon booking. You could require airlines to immediately -- say, within 5 business days -- mail a check to all passengers after canceling a flight under the stated conditions, rather than letting them wait until each passenger complains individually. Maybe let passengers elect to either receive a check for $X or a travel voucher for $Y > $X when booking.
And even if they're not malicious. A bus company in my country got fined (or, denied millions in subsidies) because they didn't meet their target of bus routes / bus lines (they get subsidies to drive routes that don't pay for themselves). They couldn't get enough bus drivers due to the Panny-D and everything else going on.
If you want to overbook like crazy and bump passengers off the plane, you should be free to try that. It's a free market, and no one is forced to fly with you.
Furthermore, a flight might be cancelled for any number of legitimate reasons (weather, strike, technical problems, crew limitations, change in government rules, etc.). A flight is not like a car trip (even though the aviation industry has been so spectacularly successful in delivering safe and reliable flights that people often forget that).
It is foolish, in my view, to rely on making any given flight.
Commercial aviation? Good one. When’s the next bailout?
In any case, have the budget carriers ever gotten a bailout?
If I call up an airline and ask them: what happens when you bump me off, and they say they will find me a new flight immediately.
In practice they often dont wven pick up the phone because they don't have enough staff.
And they get away with this
Those tools are applicable in many situations. Eg when Amazon doesn't send you the stuff they promised. Or when your shoeshop sells you knock-off Prada etc. It's a common problem with standard solutions.
Those standard solutions apply (or should apply) to airlines as well.
Eg when the airline gives you less legroom than they promised etc.
My flight was canceled a month and 5 days ago. It was to the US and Canada, was canceled 22 hours in advance, and would have been my first time to see my family since the pandemic – more than 3 years.
I spent 3 hours on the phone with the airline trying to find a way to my destination. In the end they offered me nothing. I filed for a refund, and the statutory compensation on the day of my cancellation. I haven't received either. The airline has ignored my dispute filing, and the website where I booked hasn't processed the refund.
A week ago, I filed a chargeback with my credit card. I haven't received any info on that.
Two days ago, I had to spend the time hiring a legal service which processes the statutory EU compensation, but they'll take a third of what I'm due (€600 of the €1800), and say it'll take 2-3 months.
The current system does not work. Even if I do in the end get my refund and compensation, I'll come out roughly break-even on costs, lost my summer vacation, and will be down a dozen hours of effort.
No worries, I did this a few years back and the process took a while but I got the money.
Also, the EU compensation is rather handsome, especially on a long flight like that, you mention 1800 EUR, how much was the ticket originally?
"though also American Airlines, and I won't get a refund on that" <-- you should double check this, if one of the airports is in the EU you get everything back for your departure flight.
https://realworldmachine.com/travel/airline/eu-flight-compen... "Flights must either arrive into the EU via an EU-headquartered airline or originate from the EU (regardless of airline headquarters) for the EU Flight Compensation Regulation to be applicable."
Obviously they will tell you otherwise.
Funny how people call me privileged etc. but you literally fill out a web form with flight number, upload your tickets and the solicitors handle the rest and the money gets dropped into your account within 6 months or so.
It's a lot of money, of course the Airlines are going to try to wiggle themselves out of it, so you have to fight them to get your right.
I think you will get 2700 EUR back for sure, flight compensation as well and you might even be able to claim for the BnB.
"No worries", that's perhaps fine if you have access to large amounts of cash or credit to fund replacement flights whilst you wait until the airline finally pulls its finger out. And what then if the replacement flights you booked get cancelled at the last minute? Now you're out thousands of euros.
So no, it's not "no worries".
Like a person who has spare $10,000 laying around and a lawyer on retainer can't even fathom how this is a problem.
Maybe you lost $3000 of tickets for a family flight, and booking replacement tickets will costs 2x as much because you are booking short notice.
And maybe if you cant get replacement tickets, now you loose $5,000 of hotel, so now your total losses are 8k.
And if you don't know the law and don't have legslly literste friends, maybe you never get compensation
Also known as poverty premium
For example, in the fog of war or the early game we don't know if the enemy is teching, econo-expanding, or rushing. In the mid-game we know an attack is coming, but we're uncertain its unit composition. So in the early game we store some resources while we scout. If we see them teching we can dump everything into military expansion since they'll have neither the army nor the production to counter any attack. Same idea for mid-game: knights -> build pikeman, archers -> build knights.
If it were merely about shock absorption we may as well have dumped it all into walls, archers, and castles.
Of course risk vs reward can still favor replacing parts early or building units / eco.
In the case of having a money cushion this could be true if you’re born into a wealthy family and have a trust fund. But it’s not the case for someone who has built wealth for themselves. They aren’t “privileged” in this sense. They earned it.
I used to think so untill I encountered:
"You young people don't know what it's like to work hard, I started with nothing and bought a house. You can't buy a house because you spend all your money on Avocado on toast."
Now I realise it's a polite way of saying 'you are an idiot'.
It's a mindset where you don't understand what life is like for the person you are trying to lecture. It doesn't matter if you are hostile or helpfull, it just means you don't understand the relevant problems.
You think avocado is relevant to house purchasing, you design benefits system for homeless people that asks for your address. You asks people how is it a problem that you need to file a lawsuit to get your money back - like who can't file a lawsuit. Or who doesnt have internet?
If you 'self-made' your wealth 20 years ago, you will have forgotten how it was, and times have changed. So it helps, but is not strictly relevant.
If you can get to a public library, you have internet.
Not everything is an intractable problem, though I'll agree that avocado on toast is an unlikely reason to not be able to buy a house (though is a reasonable hyperbole for "bad financial planning", if rather insultingly dismissive).
When I don't pay a fine in 14 days it doubles. So institute the same thing with a 30 day SLA and remove any paperwork requirement when the flight is cancelled or delayed by the most excessive amount.
first world problems ...
That's even written in the text: "The advantages of a PAYF model for corporate travel managers, as BTN Europe previously reported, include not having to chase refunds or pay a TMC to manage this process. There’s also a reduced risk of losing money to airline bankruptcies."
I had to do it with Icelandair, and once I told them I had filed a complaint with the government they started answering emails.
It took like 2 months from start to finish, but I got it.
This still suggests there's a problem - companies can choose to break the law and only start following it when a tiny minority actually reports them to the regulators.
The regulation should be changed so that any regulator involvement regarding the matter implies an immediate and significant penalty, so companies are better off giving out refunds directly than waiting for them to complain to the regulator.
EU FAQs - Air passenger rights - https://europa.eu/youreurope/citizens/travel/passenger-right...
That should be easy to prevent. It has to be designed so the airline (i.e. the party that holds all the power in this contractual agreement) cannot cancel the contract, but the customer's money can only be collected the moment the flight touches ground on the destination. Like a reserved amount on a credit card that car rentals use.
Flights are already "connected", it should be easy to auto-bill once the destination has been successfully reached.
There are a myriad of problems with this, to name two:
- an attacker could easily book many flights without checking in. This would cause the airline to fly at a loss.
- customers do not control when checkin starts, airlines do. An airline could easily play tricks (checking 1hr before boarding).
Wrt the 2nd one: this is easily mitigated by having a mandatory eg 2-week period for checkin... but then we're sort of where we are today, just with more uncertainty if the bookers can actually pay for their flights.
So, not a big fan.
2. Also a non-issue with a credit card. If you clear your balance in full, it doesn’t really matter that they might take some extra time in getting that money back to you.
So... Just get a credit (or a charge) card?
Come to think of it, there might also be a press release or ad-hoc exchange notice saying "banks had to refund x billions due to visa chargebacks", I could have searched for it, so why not now? I found https://ec.europa.eu/info/sites/default/files/chargeback_rep... now, which appears to imply that if you win the dispute (should be easy), your chargeback becomes a claim against the bankrupt airline and you'll get something or nothing, depending on how much is left in the airline.
No, you get your money back, and the bank now has a claim against the airline.
I haven't been through this exact scenario in my life, but I've been in plenty of non-delivery situations, however, I can't make a good faith claim that they were flat-out chargebacks, because on all of the cards that I made the purchases with, purchase protection or insurance was a listed benefit, namely on the Amex Platinum.
But there must be a card with similar chargeback benefits that's available to everyone in basically every EU country.
Nevertheless, there are plenty of opportunities to get your money back in such a situation.
I know the airline industry is a tough one, but I’ve had some brutal delays in my time and they do play a lot of games. I wouldn’t mind seeing a bigger stick hanging over them for consumer protection.
Customer pays inn money, airline gets the money when the customer boards the airplane. If the customer does not board the airplane as scheduled, or and the plane has left, airline still gets the money. If customer does not board due to cancelation or similar event, money is refunded back to customer.
With modern payment systems (at least here in Europe), the transfers are more or less instant.
And still the airlines will slowball on mandatory compensation where it's owed
That still doesn’t make it ok that you might have a large sum locked for up to a year while they figure things out.
It's basically insurance at this point, but someone just has to set up a company that buys your ticket for you and handles the legal cases (eg they pay out to you and start a reconciliation process with the airline) in the event of a default from either side.
But as a general option that someone could create a company for, it sounds like a good idea if its profitable.
Re: check-in times, that's easily solved with some legislation.
Do you? I don't think I've given any ID when booking any of my recent Schengen flights.
If a company isn't going to charge until boarding, and will charge a fee for no shows then you can be certain that they've collected identification and a payment method. Otherwise, how would they charge no shows?
I’ve flown several times in Schengen where nobody checked my ID at all.
This was the initial thought, so seems like you agree.
However everytime I see it, it delays the boarding and they skip the procedure to the default boarding pass only.
If the flight is cancelled then you are charged nothing.
And this saves getting a refund.
It's not like it would be the first industry where it would apply, made many hotel reservation where the payment is done only when checking.
An attacker could easilly ask for many ambulances to random addresses, by calling from different phone numbers. They can do the same with the police and fire department, and as a result real people will die because emergency services are not avaliable.
An attacker can book hotels where you pay on arrival. They can order thousands of pizzas with cash payment on delivery. They can probably do even order a truck full of cement if they can pull off an act.
There are thousands of possible contrived scenarios, life is full of possibilites. You aren't designing an API
This is like 'men will pretend to be transgender and be hanging out in feemale toilets' - random fictitious scenario divorced from reality.
Phone numbers can be traced, and anonymous sources like a payphone are relatively rare. Getting access to more than a few phone numbers is generally going to be difficult unless they all trace to a central source (office, school, etc.) - at which point your odds of getting caught go way up.
> They can order thousands of pizzas with cash payment on delivery.
Um. Really? Is "cash on delivery" even an option where you live? I would certainly expect any sane company to get suspicious here.
There's a huge difference between exploiting a company's lack of validation VS exploiting a legally required lack of validation. The pizza company is choosing to accept cash on delivery, whereas this proposal is to force airlines. That's a huge difference and it's alarming that you don't see the relevance.
> You aren't designing an API
When you force the rule on others, I think you do owe some responsibility to think about the consequences.
> random fictitious scenario divorced from reality.
It seems ridiculous to dismiss concerns about a proposed policy by saying we have no evidence it will happen. Of course we haven't seen it happen yet: the law hasn't passed. Conversely, we have centuries of data on whether men will pretend to be transgender. Again, this is a very big difference.
I'm not against reasoning by analogy, but these are all terrible analogies.
I can order a fridge with cash on delivery. There is a hundred of other examples.
I can come up with a fictisious 'attack' for any policy you will ever propose. The budgen is on you to argue that this 'attack' makes any sence and would be common, not on me to disprove every scenario you come up with.
You provided no argument whatsoever, why would anyone bother with this 'attack'. It doesnt. make you any money, it does nothing usefull
> I can order a fridge with cash on delivery. There is a hundred of other examples.
But again, that's an example of a corporation choosing to trust you. This is about a policy requiring it. The corporation can trivially stop sending fridges if this becomes an issue, but government policies are a lot slower to react.
I still doubt you can actually meaningfully order a large quantity of anything without providing substantial proof of your identity, to avoid exactly this sort of abuse.
You keep saying you can, but you're not providing any actual concrete examples - what specific store are you ordering these fridges from, and we can compare their policy to this proposed law. If I can really order a thousand fridges, I will happily concede the point, but I somehow doubt they'll let me.
Yes, an “attacker” could “easily” steal the identity of 20-30 people in order to create fake bookings to disturb the a single flight one time. Though it would be easier to sneak a bomb aboard it.
In front of me was a couple in the beginning of their 20s and none of them had a credit card or even debit card on them, because they had flown this flight a lot of times and they simply brought cash.
Well... their bag was slightly oversized and of course Ryainair wanted them to pay for it. So far so good, but Ryanair ONLY accepts credit cards at this point to pay for your extra luggage, so the flight of the couple was just about to bekome much more stressfull (remember this is 15 minutes before actually leaving with the plane and you literally have nowhere to do it in cash).
If I had not seen that exchange and traded cash for putting my card down, that couple would have had one sad vacation of two weeks.
All in all, airports are not equipped for this influx of "i will pay right now", because simply they are understaffed as is.
I doubt this is the case; it's easy to see the costs associated with taking a credit card because they are all upfront - e.g. a card may charge 1-5% plus a fixed fee.
However the costs associated with cash happen after the transaction and are extensive: * Cost of the time spent 'cashing up' - i.e. reconciling the cash in a till with the transactions made, * Cost of the time spent taking cash to a bank, or the direct cost for a cash collection business, * Losses due to mistakes in making change, * Losses due to fake currency, * Losses due to staff-theft, * Losses due to robbery,
I can imagine these easily adding up to some small percentage of the costs of accepting cash, comparable to the cost of a CC transaction.
It's always more expensive to handle cash here. Business plans usually estimate the total cash handling cost to be 2.5%, compared to 1% for cars payments.
(I think CC costs are also likely lower in Europe - cashback credit cards are less common/rewarding, debit cards are a lot more common)
Nitpick-- it is a RyanAir policy, not an airport policy.
RyanAir was absolutely in the wrong here.
I've been burned one time too many by RyanAir's deceptive pricing schemes.
Except when paying with more then 50 coins
Except when paying with coins over 200€ (bills are fine)
Except when clearly contractually precluded beforehand.Wherever you are quoting from almost certainly applies to creditors, not vendors in general.
Only France has a national law requiring universal acceptance. There is no such EU requirement.
However, the concept of "legal tender" is very limited and unfortunately could not be used here to put pressure on Ryanair. Cash being legal tender only means that it must be accepted as settlement for an incurred debt, which was not the case here. What's more, I seem to remember that technically it only means it in the context of legal disputes, such that the cash will always settle the debt if deposited at the corresponding court (or something like that).
Previously, I had always believed that in the US it was a law that places had to accept cash.
Try checking into a hotel, getting a rental car without a credit card and see how far you get.
Alternatively, try mailing cash to Amazon to buy something.
https://www.federalreserve.gov/faqs/currency_12772.htm
> There is no federal statute mandating that a private business, a person, or an organization must accept currency or coins as payment for goods or services. Private businesses are free to develop their own policies on whether to accept cash unless there is a state law that says otherwise
For some reason the airline would only accept Euros and Physical credit cards. I literally got 3 small bottles of water for free and 1 beer my neighbor invited me on the whole 14 hour flight.
Even on their planes here, you will not be able to buy anything with cash.
You could say it was pretty stressful since the gate was closing in 30 minutes.
I too would like to see an airline burn (more like pay up properly & help fixing their/airport shit) but we have to be careful and set incentives so they are not easily gamed on one side, and won't bankrupt airlines ie due to some heavy storms on the other.
Moreover, not everybody is plumbed into the German banking system. If you came to Germany from abroad, is your foreign debit card going to work at the airport? Who knows!
It’s unreasonable for passengers to not know if they will be able to pay for the flight, until 3 hours before. What if their bank’s anti-fraud puts a hold on the payment? What do they expect passengers to do, get on the phone to their bank while at the check in counter?
Payment is made in advance to give passengers time to resolve payment issues. It is mutually beneficial for passengers and airlines.
Is this really a worry? I have two debit cards (one issued in South America and another in Europe, one VISA and one MasterCard) and been traveling all over the world and don't think I've had issues with any of them for the last ~10 year or so. Used to be a bit hit&miss, but not in "modern times".
People come to airports from all over the world. You are going to hit every single payment edge case at an airport.
Also people in airports often have limited ability to communicate. Consider: you arrive in Germany on an international flight, go through immigration, then wish to take a connecting local flight to your final destination. When you’re in landside transit you may have no working SIM card or any kind of communications with your bank. That’s why flights are based on confirmed itineraries and not payment at the check in counter.
Wait a minute! It is! : ))
Authorization holds are valid for at most 30 days, and less than that in many circumstances (debit cards, non-travel transactions etc). The card payment industry would have to change their rules and business practices significantly, and this industry isn't known for moving quickly.
The whole thing came up because airlines don't pay back customers in a timely manner. It can takes months to get your money back from airlines even when the airline is fully at fault.
It can be quite confusing at times. For example, both Iceland and Norway are part of the Schengen agreement[3], so in that respect we're "from EU" when traveling.
[1]: https://en.wikipedia.org/wiki/European_Economic_Area
[2]: https://en.wikipedia.org/wiki/European_Free_Trade_Associatio...
Its incredibly useful for visa reasons though.
> “Everyone must be aware that at the time of booking you are entering into a contract of carriage that is subject to certain conditions, such as no-show and/or rebooking fees.”
I don’t care about the financial success of airlines but I sure as fuck don’t want jet fuel burned pushing around empty seats.
If you want to save fuel fly 5% slower and save 10% fuel.
Either way, what about the unintended consequences for travellers if a slow down was mandated permanently?
You would need at least 15% more planes, pilots, ground personnel, etc... to handle the reduced bandwidth. For non-direct flights, fewer connections could be made likely increasing the airport population its ancillary services.
Airlines already do this from time to time usually when fuel costs outpaces pricing power:
https://www.reuters.com/article/airlines-fuelcells-kemp/refi...
Its also possible to fly 20% (36kft vs 30k) higher where drag for the same speed will be lower. Drag varies linearly with density.
An aircraft purposely designed for low fuel consumption could save 50% or more jet fuel without being significantly slower.
https://en.wikipedia.org/wiki/Aurora_D8
https://www.nasa.gov/topics/aeronautics/features/future_airp...
In Germany, airlines have a strong incentive to refuse any refund. Courts are very slow to render decisions and the worst that can happen is being ordered to refund the original amount. Behaviour-correcting damages do not exist under German law. In combination this deters some passengers from pursuing their claim.
Edit: Airlines would also be ordered to pay court and lawyer fees which could be construed incentivising. Yet both fees are statutory capped and quite low for the average ticket price.
Maybe if they want to change the laws anyway, this is what they should fix instead. In particular, there should be punitive damages for everything illegal that are high enough that it's almost never profitable to break the law even if you get away with it a significant proportion of the time.
Adding some obscure consumer protection rule is a much less controversial change to the law.
The traditional German legal doctrine sees the enforcement of fair business practices rather in the hands of the authorities than in those of consumers. Of course, there is little evidence of this to work in this or similar contexts.
There ARE punitive damages the airline has to pay you if they cancel or delay your flight. It's EU law. See the sibling comment.
For instance if they cancel or delay a flight over 1500 km in the EU you're entitled to 400 Euro compensation on top of cost of ticket and other expenses you had due to it.
Does that include payment for time spent seeking a verdict?
And do you have evidence that the US style works? Or was that just a throwaway "of course the state doesn't work!" comment without justification?
That just isn't true. The airlines often pretend that isn't the case, but just linking to, e.g., the site below usually make them pay without too much hassle.
https://europa.eu/youreurope/citizens/travel/passenger-right...
So while you can have opinions about the exact conditions, you can’t argue there are none.
You can pay a company to do it for you, and onboarding with them takes longer than a half hour.
A quick e-mail to the airline with the order number, stating the expected flight plan, and comparing it with the actual flight plan and a calculated delay have always worked, even with the cheaper airlines.
I would use them only after trying to do it yourself.
My daughter was trying to come home from university this summer and they canceled her flight twice while she was in line at security. Guess what Wizzair said.
She has claims opened with Airhelp now, we'll see what happens.
This kind of pay-on-the-spot only works when there's tons of capacity, if you don't take this one, you'll get the next, no problem, and where the provider doesn't need 100% usage, i.e. where costs are incremental rather than fixed.
And airplane fails that criteria in both ways. This plan is bad for both airline and customer.
The big changes are in two unusual cases: ① The airline closes before you fly, such as Swissair, Air Berlin etc. In that case you don't pay. ② The airline cancels your reservation, as many did during the early covid phase. In that case you and the airline quarrel about nonperformance of the contract, just as you do now, but you have the money during the quarrel instead of the airline offering you a voucher.
Responsibly perhaps?
So they make the most effort to make sure the service is delivered since it will only be paid if they can deliver? I know it is a novelty idea paying for only the received service when received, something never been used throughout the history before as one always had to pay well in advance and then may or may not receive the service paid for, but perhaps we could get used to this very novel and revolutionary idea, no? : )
I believe this paying for something not delivered yet and run circles getting back if not delivered at all on the agreed terms is in the benefit of the airlines. Being abused many many times. Otherwise we wouldn't have needed extensive and stict regulations about compensations. This may change. There is a desire for it from customers.
I was employed with Amadeus Data Systems for more than 10 years, have left during COVID period.
This sounds like a big effort. I wonder how Lufthansa pulled this off in 2021...
Spoken like a true software engineer.
From my experience with people booking and taking appointments I can assure you, the airlines would be out of business within a month. If there is no upfront payment people just won't show up. Nobody cares anymore. The average person is too unreliable these days.
And not a software engineer who's worked on airline PSS systems :D
Anyone paying a flight ticket with a non-disputable payment method (or one where the reversal period times out after 8 weeks, such as SEPA direct debit) is pretty much at the mercy of the airline voluntarily (or through legal action) returning the money. I've been waiting for 10 months for a similar reimbursement now...
When the country's second-largest airline went bankrupt in 2017, many banks refused to file chargebacks due to legal uncertainty around whether doing so might be considered unlawful interference with the bankruptcy proceedings. (The bankruptcy manager fueled these by actually sending out invoices supporting that claim.)
In the context of credit/most debit card paid tickets, this is largely a non-issue, since cancelled flights (in addition to merchant bankruptcy) are usually explicitly covered under the "service not provided" chargeback provisions of the schemes.
[0]: https://en.wikipedia.org/wiki/Flight_Compensation_Regulation
The airline will still have a legal obligation to compensate (in relevant cases).
Do we really need to make airline businesses even harder to run?
If passengers really saw value in the PAYF model, any airline with growth ambitions (eg. Ryanair) could take massive market share by implementing. The free market already solves this.
The fact that it’s uncommon tells me non-business travelers don’t see much value in it.
Both planes and hotels essentially almost always require credit cards. Hotels seem to have mostly liberalized cancelation policies--which had been starting to require more notice. And flights seem to be less likely to have fairly high e.g. $200 fees associated with changes.
Anyway, this change would throw a wrench in this project's plans, but at least they have something in progress that can track it. For airlines that haven't yet started or even planning to replace the old system, they are going to have to scramble.
Airlines already collect money when you check in in many cases: seat/class upgrades (both pushed by the airlines check-in process to up revenue) and extra bags, and a few other things. Moving the payment collection for the ticket itself to time-of-reservation to time-of-check-in would take work, but probably not totally upend the modernization plan.
“The subsequent bureaucracy of cancelling ticket bookings and transferring the money back would be over with.” Good one. I had a flight (DUS 2 MUC) cancelled yesterday (due to strikes). Two clicks in the app, and the money was back in my account 20 minutes later.
This law will only do 2 things: a) Increase prices for tickets b) Will create a lot of friction. Just imaging you credit card being stolen/lost a day before the flight. Or you accidentally spending your credit on something else before the money is taken.
If you buy a cinema ticket for next weeks premiere, do you want to pay now, and have the ticket safe, or pay when you actually go to the cinema.
But you can already reserve a seat at the cinema and if your local cinema happens to screw up on a frequent basis then you'd probably get a reservation instead of paying for the ticket beforehand.
If airplanes are not full, then prices have to go up, not down.
A very possible outcome I see here is that you would probably be given a window in which to checkin, which will no longer hold until 2 hours before the flight, so they can sell the seats that were not claimed a second time
I suspect it doesn't actually work for the simple reason that fuel is the number 1 expense of airlines, and a 50% reduction would be utterly enormous for them - if such a thing existed it would be in extremely high demand.
There is a much easier fix. You give the airlines 2 weeks to refund the money. The have to refund it without any forms etc. because the damn well know who booked and paid a flight they canceled. Every day the overrun the 2 weeks, the refund is automatically increased by 5 percent. I have no doubt, 99% of refunds will be paid out after two weeks.
But I see this model may be intended to get rid of reservations and maybe schedules entirely.
If you see an advert that says "Fly to Berlin for €50.99", then you show up to the airport, see that there is a flight departing in 20 minutes, tap your card to pay the advertised price, and hop on the plane. If the plane is full, you wait for the next one in 2 hours.
Airlines by now have good models of passenger flow, by looking at national holidays, sports events, holiday seasons, etc, so they should be able to get most flights full but not overfull.
Basically the same pricing model as city busses. And it works fine there.
If airlines had the same operational cost and complexity as city buses.
And it doesn't work "fine" there: most city buses are empty for much of their route and have people standing in the aisles at popular times. This is tolerable for a bus company where operational costs are minimal and people are legally allowed to stand, but impossible for an airline.
Like the airline has a guarantee that the money shows up at the moment where it is needed and in doubt we could also have a system where the no-show fee can be "sub-locked".
The consumer on the other hand, never waives the money over until he is needed to (by confirming to the no-show or actually flying).
Similar systems exists for example for Visa guarantees. Interestingly, considering other success rates the airline should do they same for their punishment if they cancel ;)
This is basically already how online shopping with SEPA works in Germany. You place an order, type in billing data, they do a pre-authorization, and you get an instant "order confirmation". But the money is debited from your bank account only AFTER the vendor has sent out your parcel containing the goods.
Plus, Lufthansa, the main airline for business travel, has been offering exactly this PAYF model for more than a year now. So they are suggesting to enshrine in law what some companies already negotiated privately.
1. If the amount is small, just send them to Inkasso/Schufa, which will hinder their ability to close basically any other contract, from mobile phone to renting an apartment
2. Enforce collection through civil litigation via a lawyer firm
3. Sell the debt to a collection agency
I think #1 would happen regardless
Additionally, this will be a massive headache for business travelers that use their private credit cards - usually, you'd book a flight and file for reimbursement at the employer, which you then use to pay down the CC bill. Now when you book a larger amount of flights, suddenly you may end up with your CC running into its limit because all the flights are technically still "on hold" and can't be paid off.
[1] https://docs.adyen.com/online-payments/adjust-authorisation
The customer has to transfer all the money to their "virtual" card account and the money is blocked.
The only time when blocking is better is when it comes to the refund, but that too can be botched by airlines by for example automatically completing the payment at a time of supposed check-in.
A much better way would be to pay an advance. Let's say 25%.
There is a way to do preauths on debit cards though, iirc by blocking a certain amount temporarily.
Well, then they’d check you in and cancel the flight. The payment needs to be processed on takeoff for incentives to be correct.
Germany is the California of Europe
great idea or populism to mask the absolute failure in German politics in the past 20-30 years. If we didnt have the old industries (that the post-Nazi generation built), we would be doomed.
Inside Germany: "we have these great ideas, but the rest of the EU won't cooperate".
Outside Germany: "Germany is basically the big bossman of the EU, along with France. What they say usually goes".