U.S. slaps $1.1 million fine on KLM for slow Covid refunds of $113.3 million

Dutch flag carrier KLM was one of three passenger airlines fined a total of 2.5 million dollars (2.3 million euros) for dragging their feet when refunding passengers during the coronavirus pandemic, the U.S. Department of Transportation announced on Monday. KLM was hit with a 1.1 million dollar fine (1.01 million euros) for drastically changed itineraries or cancelled flights, and the airline was ordered to pay passengers refunds that are still owed, which total 113.3 million dollars (104.1 million euros).

Lufthansa was ordered to pay the same fine, even though the German airline was accused of not paying nearly seven times the refunds its Dutch rival owed. South African Airways was ordered to pay a 300 thousand dollar penalty (276 thousand euros), and owes roughly one-tenth in passenger refunds compared to KLM. The fines must be paid to the U.S. Treasury, but the total can be reduced if passengers receive more compensation than the legal minimum.

During the first wave of the Covid-19 pandemic, the Human Environment and Transport Inspectorate in the Netherlands received hundreds of complaints where refunds were either paid late, or customers were only given travel vouchers instead of cash. KLM was one of many airlines that buckled to pressure from the European Commission and various consumer groups to finally start offering cash instead.

“When a flight is cancelled or significantly changed, you shouldn’t have to fight with the airline to get their money back, and we’re holding airlines accountable when they fail to give passengers the refunds that they’re owed,” said U.S. Transportation Secretary Pete Buttigieg in a statement.

The U.S. agency announced last month that airlines operating in the United States have to pay cash refunds to passengers automatically when flights are cancelled. The regulator is also trying to cut down on the unbundling fees that passengers face towards the end of the booking process.

The agency also wants to ban additional seating reservation fees charged to families who want to sit together, and improve access for passengers who require the use of a wheelchair.