Any review of airline insolvency measures must push for mandatory financial protection for every airline seat sold in the UK, leading industry figures have said following the collapse of Flybmi.
The airline’s demise at the weekend has revived calls for a separate flat levy on air tickets to create a pot not dissimilar to the existing Air Travel Trust – or “Atol” – fund, designed instead to reimburse and repatriate passengers with flight-only bookings.
The Department for Transport’s ongoing Airline Insolvency Review, convened following the collapse of Monarch in October 2017, is exploring options to limit any future government involvement after ministers stepped in and ordered the repatriation of 110,000 Monarch passengers at a cost to the taxpayer of around £60 million.
Draft proposals include a levied fund, an extension of the existing Atol scheme or commercial solutions such as insurance, bonding or trust accounts.
Chairman Peter Bucks was due to report to the government in December; however, a spokesperson for the review confirmed to TTG its work was continuing into Q1 2019 before reporting by “mid-March”.
Julia Lo Bue-Said, chief executive of the Advantage Travel Partnership, said the travel industry had long advocated a “per passenger levy” on all ex-UK flight departures. “This type of scheme would be transparent in protecting all customers for every flight regardless of how they paid.
“As it stands, Atol holders protect consumers against their own insolvency; the recently introduced Package Travel Directive requires everyone selling a package to protect against their own insolvency too.
"However, the airlines sit outside this scope so therefore any customers who booked with Flybmi will need to claim via their credit card company [if that’s how they paid] – but this does not help them with rebooking and ongoing travel arrangements.
“The SPAA [Scottish Passenger Agents’ Association] and the AAC [Association of Atol Companies], among others, have for years advocated the need for airlines to be in scope. Perhaps the unfortunate demise of Flybmi will provide a wake-up call for government to review."
Alan Bowen, legal advisor to the AAC, said the group met days before the collapse of Flybmi to discuss the government review. The current system, he said, put agents at risk of chargeback by banks if customers make a claim.
“They [the banks] shouldn’t because the agent has not broken their contract to make a reservation, issue a ticket and pay the airline,” said Bowen. “[But] I’ve found some card issuers more than willing to refund customers and leave agents out of pocket.
“If the review produces a plan, we need urgent implementation. Flybmi and the worries over other airlines means consumer confidence is not as high as we would like.”
SPAA president Ken McLeod added: “It will be interesting to see as the days go by the comparison in response by the government. Why should Monarch passengers get repatriated and Flybmi passengers not?”
The SPAA has long advocated a £1 fee levied on all ex-UK departures. However, McLeod said was the review to advocate such a solution, he foresaw a “robust response” from those airlines “in good health”.
Rob Griggs, policy and public affairs director for Airlines UK, the trade body for UK registered airlines, said the existing, voluntary rescue fares regime was working effectively “to assist at very short notice stranded UK passengers without incurring taxpayer liability”.