Under EU Regulation 261, airlines are required to refund passengers for cancellations within seven days, although many have flouted the rule amid the coronavirus crisis with no formal enforcement action having yet been taken.
"The Covid-19 pandemic has had an unprecedented impact on international transport, including air travel," said the letter, which has been signed by Ireland, France and Portugal, among others.
"An immense number of flights have been cancelled; air carriers are no longer generating passenger business, yet they continue to incur high running costs."
The 12 countries said the regulation obliging airlines to reimburse cancelled tickets in cash placed airlines in a "difficult situation" at a time they are facing a "serious cash flow challenge".
"When the wording of the regulation was conceived, the current global crisis and its impact on air travel could not have been foreseen," said the letter.
"The goal shared by the European Union and its member states must now be to preserve the structure of the European air traffic market beyond the current crisis, while considering the interests and necessary protection of passengers."
They have called for the European Commission to temporarily amend EU Regulation 261 to allow airlines to choose how they reimburse passengers, while ensuring consistency across EU member states to "allow a common and adequate level of consumer protection".
"We believe regulating the temporary issuance of vouchers is possible and acceptable for consumers, if some key principles are taken into account," said the signatories. These key principles would include pledging transparency to passengers; offering vouchers of common validity with "maximum flexibility of use"; and a clear right to a refund once the voucher expires in the event it is not used.
"Moreover, as consumers are offered vouchers with a long-term validity, it is crucial to discuss ways to protect voucher owners against the risk of bankruptcy of the airlines that issued those vouchers.
"We are ready to explore this on a European level and call upon the commission to take this aspect into account. The corresponding work should however not block action on the demand from airlines, which is becoming more urgent every day."
