In its report, UK aviation: Reform for take-off, the transport select committee urged the government to introduce the Bill in the next session of parliament, meaning the forthcoming 12 months. The legislation was originally part of the Queen’s Speech in December 2019 but fell by the wayside in the pandemic. It was not mentioned in the 2021 Queen’s Speech.
Under the proposed law, a special administration regime for airlines will be introduced to avoid a situation where all flights are grounded and passengers stranded. A Flight Protection Scheme, costing less than 50p per ticket, would be introduced to protect all passengers flying from the UK.
The CAA would also be given new powers to step in when airlines are on the brink of collapse, while airline insolvency will be reformed to “strike a better balance between strong consumer protection and the interests of taxpayers”.
In addition, the CAA’s remit to repatriate Atol-protected passengers would be extended to non-Atol passengers.
In October 2020, the government said only it was keeping “under review the scope and timing of any future reforms in this policy area”, because it was “mindful of the need to consider the challenges faced by the aviation sector as a result of Covid-19”.
The report quotes the CAA’s consumer panel chair, Jenny Willott, who said there were “definite benefits to passengers if an airline that is going into insolvency can carry on flying and be wound up in an orderly way, in the way it is done in a number of European countries, rather than having a mass operation to repatriate being run by the CAA”.
The MPs highlighted the US system of bankruptcy protection, where airlines are allowed to carry on flying while they restructure and seek new funds.
“Introducing such a binding code in the UK to cover airline insolvencies could enhance consumer protection and deliver a functional, transparent insolvency procedure,” the report concluded.
