Does the EU have rules about air ticket refunds in case of visa refusal?

The simple answer is NO, there are no rules forcing a refund in your situation.

The regulations you quote are for denied boarding, which means you have to go to the airport on the day of the flight, try to check in, actually get denied by the airline staff, then look into getting a refund or use your ticket for a future trip after you have your visa.

But if there is any notation in your passport that your visa was denied or if the case goes to court and the airline discovers your visa denial, it could be argued that you knew you were ineligible to travel and therefore the boarding denial is not "involuntary", but simply an attempt to defraud the airline out of a non-refundable airfare.

Calling the airline ahead of departure and trying to change or cancel your ticket, will be considered as a voluntary cancellation / change on your part and subject to whatever fees were applicable to your fare class. Call centers do take notes, so if you call about cancelling due to visa refusal, that maybe noted in your booking record and available to future agents who review your record (like later trying the denied boarding route above)

Compensation rules, forced refunds, etc apply when the airline has committed certain acts. In your case, the Embassy is the source of the problem and an airline is not responsible for a 3rd party's actions, that burden falls on your shoulders (or wallet).

From a legal point of view, the only party even remotely liable is the embassy if they required you to purchase an airline ticket before applying and then denied your application, but good luck pursuing that angle.

Does the EU have rules about air ticket refunds in case of visa refusal?

EU Regulations

The rules you quoted are:

Passengers denied boarding against their will should be able either to cancel their flights, with reimburs*m*nt of their tickets,

...

(j) ‘denied boarding’ means a refusal to carry passengers ... except where there are ... inadequate travel documentation;

I certainly would interpret lacking a valid visa as "inadequate travel documentation"

To me, this means that you have no legal entitlement, under this law, to a refund - if you turn up at the airport without a valid visa where one is required by your destination.

This means you have to look at the airline-specific terms and conditions, they might be more generous than legally required.

I am not a lawyer, so this is not legal advice.

Airline rules

AF and KLM are part of the same group but you can find slightly different documents at each airline's website (though both documents state they apply to both airlines)

Air France rules appear to follow the standard EU rules:

You are not entitled to compensation if you were refused boarding for reasons related to health, security or inadequate travel documentation.

KLM rules seem to give somewhat mixed advice:

3. DENIED BOARDING CONDITIONS
   In the event of an overbooked flight ...
   You are not entitled to this if there are reasonable grounds to deny boarding, such as reasons of health, safety, security or inadequate travel documentation.

3.2 DENIED BOARDING COMPENSATION
This compensation scheme is based on EU Regulation 261/2004.

If in doubt, I would ask the airline to clarify before purchase.

Related Questions

• What if my visa is refused after I already bought an air ticket?

The gist of your question is "does the EU have any regulations which require an airline to refund a fare regardless of the fare class in the event that any visa application related to that fare purchase is denied" and the answer to that is no.

Some EU airlines voluntarily refund non-refundable fares in the event of a visa denial, but many do not have a publicly stated policy on it, so the correct thing to do is to purchase a fare in a refundable fare class to be sure of a refund in the event of a potential visa denial.