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A while back a friend of mine (South American) traveled from the USA to the Schengen area without a return ticket. Back then, he was applying for Schengen residence (didn't have one yet and didn't present any evidence of it when boarding).

In an European Union FAQ it says:

"you might be asked to... show... for example tickets for further journeys and return tickets"

And this thread says:

The airlines are responsible for your return transport if you are refused entry into a country, so the airline has interest in avoiding you getting refused entry at the destination.

He was questioned about not having a return ticket when entering the Schengen area and after showing some documents to prove he had a residency application ongoing, he was allowed in. Because he is from South America he was eligible to a 90-day tourist stay.

Usually the airlines are stricter than immigration agents. So I wonder if he had been traveling directly out of his home country to the Schengen area, would he have been denied boarding? The airline is not even flying from Europe to South America, so what would happen in case he was denied boarding upon arrival in Europe? Would he be deported to the USA?

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He was questioned about not having a return ticket when entering the Schengen area and after showing some documents to prove he had a residency application ongoing, he was allowed in. Because he is from South America he was eligible to a 90-day tourist stay.

It's important to note that there are many scenarios in which you may enter the Schengen area under short-stay rules without an intent to leave. Even if you are only entering for a short stay, there is absolutely no requirement to have a return ticket, you are merely required to be able to purchase one or somehow make your way out of the area in time.

But you are right that transporters sometimes insist on it and it certainly makes things easier.

Usually the airlines are stricter than immigration agents. So I wonder if he had been traveling directly out of his home country to the Schengen area, would he have been denied boarding?

That's possible, I don't really know about that.

The airline is not even flying from Europe to South America, so what would happen in case he was denied boarding upon arrival in Europe? Would he be deported to the USA?

What happens depends a bit on the country. One option is indeed to simply send the person back where they come from. The airline basically has to take care of that so it is fastest and cheapest for the destination country but obviously entry to the US is not guaranteed in this context.

If that's not possible for any reason, the local authorities will then look for any country that will take the person. In general, that will be their country of citizenship but it could also be a country where they are a resident. That usually requires contacting the relevant consulate, especially if the person ditched their passport (a common tactic to avoid removal). This also means spending at least a few days in detention. If you agree to leave voluntarily and to buy your own ticket, you may sometimes be allowed to fly to a country of your own choosing.

I have even heard of someone being bounced a couple of times back and forth between two countries. After the second turnaround, one of the countries involved stopped the charade and began the process I described in the second paragraph (removal to the country of citizenship).

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