Air Belgium Bankruptcy Highlights Need for Stronger Passenger Protections Amid Rising Airline Insolvencies in Europe: What More You Need To Know?

In a significant blow to travelers and the European aviation industry, Air Belgium, a charter and cargo airline, was declared bankrupt on April 30, 2025, leaving thousands of passengers unlikely to receive refunds for cancelled flights.

The collapse of Air Belgium has left a significant number of travelers stranded without compensation. According to ECTAA, this situation reflects a broader systemic issue: when an airline collapses, passengers frequently bear the brunt, especially if they booked through travel agencies or as part of package holidays.

This places a disproportionate financial burden on travel agents and tour operators, who act as the final link to consumers yet face insolvency risks themselves. ECTAA calls for enhanced regulatory frameworks to better protect travelers and intermediaries alike.

The collapse of Air Belgium is not an isolated case. Over the past 25 years, Europe has witnessed approximately 1,200 commercial airline bankruptcies, according to aviation regulatory bodies and financial analysts.

While large flag carriers often have state support or deeper financial reserves, smaller airlines frequently operate with thinner margins and are more vulnerable to market shocks such as pandemics, fluctuating fuel prices, and geopolitical events.

European regulations, including EU Regulation 261/2004, provide some passenger rights concerning flight cancellations and delays. However, insolvency remains a complex issue. While airlines must hold financial guarantees or insurance to cover refunds in case of insolvency, enforcement and coverage often vary.

The European Union Aviation Safety Agency (EASA) and the European Consumer Organisation (BEUC) have highlighted the need for improved airline insolvency frameworks to protect consumers and ensure fair compensation.

In Spain and other countries, additional national regulations address short-term rental licenses, consumer rights, and airline operations to enhance oversight, but gaps remain.

Tour operators who package flights with other travel services face financial strain when airlines go bankrupt mid-transaction. These companies may be forced to cover costs for alternative flights or accommodations without reimbursement, threatening their viability.

Such reforms would help stabilize the tourism ecosystem and restore confidence among travelers and industry players.

Ensuring stronger financial backing, better insolvency protocols, and clearer legal frameworks will be crucial to preventing similar disruptions in the future and sustaining the growth of European and global tourism.

Passengers, travel agents, and airlines alike will benefit from a transparent, resilient, and equitable marketplace, balancing innovation with accountability.