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'Clearer, fairer, more transparent system needed'

'Clearer, fairer, more transparent system needed'

Alan Bowen, legal advisor to the Association of Atol Companies, accused the government of “fiddling while Rome burns”.

 

“We know change won’t be immediate, but we would like to see at least the beginning of action with publication of the report,” he said. “It will need primary legislation and I fear some airlines or airline associations will do their best to stymie the whole idea.”


John de Vial, Abta’s director of financial protection and financial services, said the association had long lobbied for a “fairer, more transparent” system of airline insolvency protection.


“Our response to the review called for a solution that enhances consumer clarity around what is protected, prevents market distortions, avoids duplication of consumer protection costs for businesses providing protection, and makes sure funds are immediately available in the event of a failure to pay for repatriation,” said de Vial.


“The review’s interim report made clear the ongoing nature of this risk. Following Monarch, and other even more recent failures including Flybmi, we urge the government to act on this matter. We understand the report has been delivered and is now with the minister, and is expected to be published in the coming months.”


A spokesperson for Airlines UK, the trade body for UK registered airlines, said the current voluntary system of other airlines offering rescue fares in the event of an insolvency was effective, adding some of the proposals raised in the review’s interim report risked pushing up costs for airlines and consumers.


“We agree with Peter Bucks who has rightly highlighted airline insolvency is a rare occurrence. We believe rescue fares represent the de facto ‘go to’ solution in most cases.


"We saw during last year’s Cobalt and Primera Air insolvencies, and most recently with Flybmi, how the existing and voluntary rescue fares regime has worked effectively to assist at very short notice stranded UK passengers without incurring tax payer liability.


“At a time of rising costs for airlines, and faced with the recent collapse of another UK carrier, this is not the time to be adding additional financial burdens on the industry, for example, through a new levy on airlines to fund rescue flights.

 

"A levy would represent another cost that is passed on to consumers, who already pay the highest rate of Air Passenger Duty in the world in addition to ever increasing airport and infrastructure charges.”

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