Air Travel Industry Rallies Against EU Cash Proposals

February 14, 2024
Back
The International Air Transport Association has called on policymakers to be flexible in their development of the regulation on the legal tender of euro banknotes and coins.

The International Air Transport Association (IATA) has called on policymakers to be flexible in their development of the regulation on the legal tender of euro banknotes and coins. 

IATA has warned co-legislators crafting the EU’s cash access rules that they risk taking a step back for the travel industry if airlines are made to comply. 

The trade association, which represents some 320 airlines globally, has said that it "fully understands" the objectives of the legislative proposal, which aims to safeguard the role of cash, ensure it is widely accepted as a means of payment and remains easily accessible for people and businesses across the euro area.

"Even if the objectives of the proposal are to protect the role of euro cash by clarifying its status as legal tender and to ensure consistency with the related initiative on the digital euro, some adaptations are required to ensure the continued, safe and efficient operations of airlines," the position statement continues. 

The European Parliament’s Economic and Monetary Affairs (ECON) committee is due to vote on Thursday (February 15) on which amendments it wants to make to legilsation on the legal tender of euro banknotes and coins.

This legislation was published last year as part of the Single Currency Package, where efforts have been led by rapporteur Stefan Berger. Amendments submitted by lawmakers, including Berger, would firm up the European Commission’s plans for cash acceptance. 

Henrike Hahn, a member of the parliament in the Greens faction, has laid down an amendment saying that “member states should equip national competent authorities with all the required competencies and resources to ensure the mandatory acceptance by payees”.

Amendments outlined by lawmakers in the Socialist and Democrats (S&D) party suggest similar. 

Potential impact on airlines

"My first thought was how will this work?” said Paul van Alfen, managing director of Up In The Air, a travel payment consultancy. 

“It is hard to put the genie back in the bottle, and this will be tricky operationally for airlines to comply with,” he told Vixio. 

The Netherlands-based consultant explained that this will not be difficult from a technology perspective. ”However, airlines will find it challenging to have to account for cash that is missing, and it is also very labour-intensive to handle cash in an airplane so will be tough for flight attendants." 

“IATA members are understandably concerned, as this increases the risk of fraud and of robbery,” said David Grivet, senior manager of EU affairs at IATA. 

“Responsibility will fall on the shoulders of cabin crew and handling cash is not their primary role,” he told Vixio. “People don't want to bother with coins and banknotes and airlines have gradually gone cashless to accommodate passengers."

The position statement also notes that, in the past, cash had to be counted and reconciled onboard, causing a considerable burden for crew members. 

After a flight, IATA has said that crew had to carry cash through the airport to cash boxes, and depending on the destination, the duration of the flight, and the number of passengers, the amount to be carried by crew could reach several thousand euros.

"Airports are not banks, so when you land, you will need to deposit your cash if you're an airline, this is always challenging,” said Grivet.

Further, he pointed out that during the COVID-19 pandemic, the use of cash practically disappeared due to sanitary reasons. “Reintroducing the mandatory acceptance of cash would be a huge burden for some members, especially when there doesn't seem to be much interest from the general public."

Will MEPs' minds change?

According to Grivet, there is a strong willingness from the ECON committee members to keep this mandatory. 

“Now, we need to understand the reasons why and hopefully can make way for some flexibility,” he said. 

However, Grivet pointed out that time is running out to change things. “The airline industry doesn't appear to have been considered, but there is a risk that a hundred different sectors are pushing for this type of exemption.

"It doesn't play in our favour that parliamentarians are currently in a rush to close files, as soon they will not be in Brussels,” he said, referencing the European elections in June. 

“The file will be put on hold for the next few months, and that gives us time to consider how we can engage with the Council and with the Commission."

As with other payment files, the euro banknotes legislation will be finalised by the next iteration of the European Parliament. 

Another issue that stakeholders could come up against is how much of a pertinent topic access to cash has become recently in the EU, as well as the UK. 

Closing bank branches and a decline in ATMs have resonated with politicians across the continent. 

Irish finance minister Michael McGrath introduced a new bill on access to cash in January. If the bill passes, supermarkets, pharmacies and convenience stores will be required to accept physical cash, while other merchants will be exempted.

Also last month, the Dutch Ministry of Finance announced a consultation on its Cash Payments Act in January. 

This includes proposals such as an obligation for large banks with more than 3m payment account holders to provide a national basic infrastructure of ATMs. 

Our premium content is available to users of our services.

To view articles, please Log-in to your account, or sign up today for full access:

Opt in to hear about webinars, events, industry and product news

To find out more about Vixio, contact us today
No items found.