The government has set out plans for new airline insolvency legislation, building on the report issued by the Airline Insolvency Review in May.

It follows the collapse of Thomas Cook on 23 September, which left 150,000 passengers stranded overseas requiring repatriation.

Announced on Thursday (19 December), the key aim of the proposed legislation is to balance consumer protection against the interest of taxpayers, who have been left to foot the bill from previous insolvency episodes.

Key changes include: introducing a special administration regime to keep aircraft flying long enough for passengers to be repatriated; extending the CAA’s remit to apply to the repatriation of both Atol and non-Atol protected passengers; and enhancing the CAA’s regulatory powers to improve oversight of airlines’ financial health in an effort to mitigate the impact of future insolvencies.

The measures will also establish a repatriation "toolkit" featuring a range of measures to benefit companies and passengers, most notably making it easier for the CAA to grant a temporary airline operating licence so an airline can continue repatriating passengers following insolvency.

There was clamour for airline insolvency reform following the collapse of Monarch in October 2017, whereby the government convened the Airline Insolvency Review chaired by Peter Bucks.

Many of the proposals, which were detailed in the government’s new legislative programme announced on Thursday (19 December), are lifted from Bucks’ report.

Speaking exclusively to TTG shortly after the collapse of Thomas Cook, Bucks said a lack of progress on airline insolvency reform would become progressively “less defensible” in the event of another major insolvency.

Following Cook’s collapse, Abta urged the government to bring forward a consultation on the recommendations of the Airline Insolvency Review, and demanded airline insolvency reform be considered separately to broader aviation strategy.

Chief executive Mark Tanzer said: “While operationally well-managed by the CAA, the decision to once again repatriate holidaymakers, regardless of whether or not they were legally entitled to that protection, undermines the package holiday sector by incentivising consumers towards unprotected arrangements.

“Abta has long argued for clarity regarding airline insolvency arrangements and welcomes the commitment in the Queen’s Speech to bring forward legislation.

“This is a complex issue, as was recognised by Peter Bucks in the Airline Insolvency Review recommendations, and should include a full consultation to provide a solution as confusion regarding the protection provisions is damaging to customers and businesses alike.”