The DfT is consulting on how to remedy the situation when airlines cancel flights within 14 days as part of its plan to replace EU261 following Brexit. The DfT’s Aviation Consumer Policy Reform paper said operators had called for part of EU261 to be retained.

“We have heard from the travel industry a call for package organisers to be able to make a claim through legislation, i.e. Regulation (EC) No 261/2004 (as retained in UK law) on behalf of the consumer for a full refund where a flight that is part of a package holiday is cancelled by the operator.”

The proposal is only for EU261 claims made within 14 days of departure. Currently, it is the customer that must make the claim against the airline if a flight is cancelled, rather than the operator.

The DfT said: “This would not affect the rights of the individual consumer, who would continue to receive their refund through the package organiser, nor should it affect airlines who would ordinarily do this through the commercial arrangement with the package organiser, but it would make clear in legislation the right for the package organiser to recoup the refund from the airline.”

Alan Bowen, legal advisor to the Association of Atol Companies, told TTG: “It has the potential to give the CAA powers to take action against airlines that are refusing to refund when flights are cancelled. We’ve seen the CAA has been ignored and has no power to take action.”

The document also considers the question of delay compensation to consumers on domestic flights. Currently, under EU rules, compensation is not paid until a three-hour delay. One proposal is to change this so that 25% of the fare is paid for delays of one to two hours, 50% for two-three hours and 100% over three hours.

The proposals means that more passengers would be compensated, but amounts would be smaller, as current rules mean a £220 minimum payment is made - often far more than the original fare.

“It will affect the likes of Loganair and Eastern Airways, because the likelihood of being delayed for one or two hours is far more likely than three hours. Small airlines charge smaller fares, to give 50% of it back is quite a lot,” said Bowen.

An Abta spokesperson said: "We have received the DfT consultation document and we will be consulting with members to shape our response."