Airline insolvency

Germania collapse hits passengers, tour operators and airports

Germania is down and out after more than 30 years in business.
Hamburg Airport
Germania is down and out after more than 30 years in business.

The insolvency and grounding of Berlin-based leisure airline Germania has left thousands of seat-only passengers with worthless tickets, forced tour operators to quickly find alternative flights, and sparked renewed demands for airline insolvency insurance legislation.

Despite recent claims that it had filled a €15 million liquidity gap, the privately-owned German airline was forced to file for insolvency late on Monday and stopped flights early yesterday. The move leaves some 1,700 employees, who reportedly have not been paid for January, facing the loss of their jobs. Germania, with a fleet of 37 planes, flew more than four million passengers a year from regional German airports to 60 destinations in Europe, North Africa and the Middle East.

Owner and CEO Karsten Balke said: “Unfortunately, we were ultimately unable to bring our financing efforts to cover a short-term liquidity need to a positive conclusion. We very much regret that consequently our only option was to file for insolvency.”

Germania repeated its earlier explanation that its short-term liquidity need emerged mainly to the financial impact of unforeseeable events such as massive increases in fuel prices last summer and the simultaneous weakening of the euro against the US dollar, considerable delays in phasing aircraft into the fleet and an unusually high number of maintenance incidents affecting its aircraft.

Just like with the insolvency of Air Berlin in 2017 and of niche charter carrier Small Planet Airlines last year, passengers impacted by Germania’s insolvency fall into two classes: package holiday customers who are legally entitled to alternative flights that their tour operator has to organise; and passengers who booked directly with the airline and have no legal right to compensation.

The German Travel Industry Association (DRV) said that “tens of thousands” of passengers would be affected over the coming weeks. Tour operators responded quickly to organise alternative flights for customers booked on Germania flights.

Market leader TUI promised to organise flights quickly and started re-booking passengers on to other flights. Tourism director Stefan Baumert said: “We can promise our customers that we will do everything necessary to secure their flight. No one needs to be worried that he or she cannot fly on holiday or will be stranded at their destination.”

Alltours said it would ensure that customers due to fly with Germania would be provided with alternative arrangements. “For trips with a Germania flight in the current winter season and forthcoming summer 2019 season, Alltours will organise replacement transportation for its guests, so that they can go on holiday as planned,” the company declared.

At Schauinsland-Reisen, some 90 staff are busy helping affected customers, primarily those with departures up to March 31. An alternative flight schedule will be drawn up for flights after April 1. According to the company, about 70,000 bookings are affected in total.

German and international airlines also moved quickly, offering special cheap fares to passengers who had booked directly with Germania, and some are considering additional flights on some routes.

Eurowings, which has the biggest route overlap with the insolvent carrier, is offering a general 50% price discount for stranded Germania passengers. Condor will also charge only 50% of its normal fare for affected passengers, although seats will only be available on a stand-by basis.

Ryanair-owned Laudamotion is offering ‘rescue fares’ such as €9.99 from Palma to Berlin, €19.99 from Majorca to Münster/Osnabrück and €29.99 on various routes from the Canary Islands back to Germany. Easyjet has a general €110 fare for numerous routes to Berlin from Spanish and other destinations.

TUIfly, which also has a 50% fare discount for impacted passengers, said it would contact airports affected by the insolvency and reorganise its summer schedule. At present, TUI Germany’s in-house carrier plans to operate with 41 planes but more could be added due to the new market situation, a spokesman said.

Similarly, Sun Express quickly wants to increase capacity on routes between Germany and Turkey in response to the disappearance of Germania. “Tourism to Turkey will not suffer,” underlined sales director Peter Glade. The airline, with a fleet of more than 70 jets, is offering special fares for Germania passengers, especially those stranded at destinations in Anatolia.

Meanwhile, travel industry representatives and consumer protection organisations alike renewed long-standing calls for airlines to be forced to take out insolvency insurance, and thus ensure legal protection for passengers.

“Holidaymakers who booked a tour operator package in a travel agency are well-protected,” said Ralf Hieke, DRV vice-president for medium-sized travel agents. But, referring to the lack of protection for seat-only passengers, he added: “We finally need a competitively-neutral insolvency insurance for airlines. This is the only way to give travellers more security.”

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