Emirates dips into cash reserve and refunds 500,000 airfares

Dubai-based carrier Emirates is using cash reserves to refund customers as airlines around the globe look for ways to handle rebates in the aftermath of grounded flights.

Emirates is one of the few global airlines that is refunding customers as earlier this month, global airlines had pleaded for government assistance  andwanted the rule requiring them to refund fares for cancelled flights annulled.

A global industry group had warned and argued that many of the world’s airlines are running out of money and on the brink of financial collapse and therefore they cannot afford to give customers refunds for cancelled flights.

With about half-a-million requests pending, the Dubai-based carrier said it is ramping up the capability to handle 150,000 refunds per month from 35,000 before the coronavirus outbreak.

Emirates, which received assurances for government support last month, plans to clear the backlog by early August.

“We are dipping into our cash reserves by being proactive in processing refunds, but it is our duty and responsibility,” said Sir Tim Clark, president, Emirates.

Carriers have resisted refunding passengers for cancelled flights as they sought to preserve dwindling cash reserve.

Airlines, including Emirates, have been steering customers to vouchers, prompting a flurry of complaints. The global airline industry is expected to burn through as much as $61bn in the second quarter, according to the International Air Transport Association (IATA).

Emirates said earlier this week it also offers customers two other options: keep existing ticket for up to 24 months or exchange the unused portion of the tickets for a travel voucher equivalent to the amount paid for their original booking.

The Dubai carrier has continued to fly to a select number of destinations as repatriation flights for overseas nationals in the emirate, but a ban on transit passengers imposed by the UAE government means that the airline is still unable to revert to its traditional mode of being a connections-based hub carrier with a sprawling global network – the model on which Emirates has built its success over the past three decades.

Its Abu Dhabi-based neighbour and state-owned competitor Etihad Airways plans to resume passenger flights on May 16, 2020, saying that it is “working closely with the UAE government and global aviation authorities and gradually return to a fuller schedule as soon as it is safe for us to do so.”