Troubled airline files bankruptcy, travelers may not get refunds

A traveler protection association is calling for changes after an airline called for bankruptcy.

May 19, 2025 - 20:56

Troubled airline files bankruptcy, travelers may not get refunds

While its name leads one to assume that it could be a country’s flagship airline, Air Belgium is actually a charter and cargo carrier that aims to link the small European nation to Asia and China in particular for commerce.

The national airline for Belgium is Brussels Airlines.

After years of mounting financial losses exacerbated by the drop in business with China during the Covid-19 pandemic, Air Belgium canceled its remaining passenger flights in October 2023 and continued to downsize both its workforce and aircraft over the next year.

When efforts to find new investors did not live up to expectations, Air Belgium was officially declared bankrupt by the local Walloon Brabant court on April 30, 2025.

By taking over the airline’s remaining cargo business, French logistics company CMA CGM was able to save 124 jobs. The rest of Air Belgium will be formally shut down and liquidated — this, in turn, makes it unlikely that any of the passengers who had flights with the airline will ever see refunds for the cancelations from the airline directly.

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Unrefunded tickets now part of bankruptcy claims

"The remaining claims, such as airline tickets that have not yet been refunded, are now part of the claims under the authority of the receiver," an Air Belgium representative told Belga News Agency on April 30.

In response to this announcement, the European Travel Agents’ and Tour Operators’ Association (ECTAA) issued a statement calling upon European regulators to institute better airline insolvency protections to prevent similar situations from happening in the future. According to the agency representing over 70,000 travel agents and tour operations across Europe, the cancelations resulted in over €8 million ($9 million) in losses of which €5 million had to be absorbed by the tour operators and other intermediaries.

"Thousands of passengers are unlikely to receive refunds for their cancelled flights, with the remaining claims now part of the bankruptcy proceedings," ECTAA said in a statement. "[…] When a travel intermediary sells an air ticket as part of a package and the airline goes bankrupt, the package organizer is required by law to provide an alternative ticket to its customers-often without any prospect of recovering the original funds from the insolvent airline."

Air Belgium was founded to link the small European nation to Asia and China.
Shutterstock

Travel agencies ‘left to absorb the losses’

The association also argued that this "places an unfair financial burden on travel intermediaries, who are left to absorb the losses caused by airline failures."

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The trouble with Air Belgium started to snowball after its revenue suddenly fell by more than 40% in 2020, and it started reporting annual losses of over €20 million year after year.

Initial reports showed that Chengdu-based carrier Sichuan Airlines was initially in talks of stepping in as an investor willing to save the airline but ended up getting spooked by Air Belgium’s heavy debt load.

While Air Belgium stopped its last passenger flights in 2023, the cancellations of what was scheduled for the coming months still resulted in heavy losses to tour operators and in some cases passengers directly.

In calling for more regulation, the ECTAA drew attention to the fact that there have been approximately 1,200 such commercial airline bankruptcies in the last 25 years.