Airline Bankruptcy and Consumer Protection in the European Union

Airline bankruptcy is a common phenomenon in Europe, especially in the last decade. A sudden interruption of operations is often the result of air carrier's financial problems or the revoking of its operating license. The liberalization of air transport industry in Europe, along with other factors, has contributed to the increase in the number of airline bankruptcies. Consumers facing airline bankruptcies, however, are not always protected, as there are cases in which passengers were stranded abroad or not compensated because of lack of assets. The existing legal framework of the European Community does not contain any specialized provision, although there is Community legislation on the monitoring of airline finances, travellers' rights, and insolvency proceedings. This article examines the relevant legal instruments and discusses potential amendments to legislation, such as mandatory insurance or the creation of compensation funds, in order to provide consumers with effective protection against airline insolvency.