All UK scheduled airlines could be made to offer financial protection under new government proposals – but passengers would only be covered for repatriation, TTG understands.
The requirements would apply to about a dozen UK-based carriers and would ensure all passengers stranded when a British airline fails are brought home, sources close to the discussions have told TTG. The arrangement would not extend to refunds in advance of travel.
It is unclear at this stage how the scheme would be funded, but it would run parallel to existing Atol protections.
Calls for a formal repatriation scheme intensified after the collapse of Monarch in October 2017 when the government instructed the CAA to repatriate all passengers, irrespective of whether they had Atol protection, at an eventual cost of about £40 million to the taxpayer.
The government commissioned the Airline Insolvency Review to find a solution. However, four months after its findings were published in May 2019, the debate was reignited when Thomas Cook failed, leaving 140,000 Britons stranded overseas, all of whom were repatriated by the CAA.
A legislative framework was set out in the December Queen’s speech for a repatriation solution that:“struck a better balance between consumer protection and taxpayers’ interests”; allowed airlines to continue flying while insolvent so they can bring passengers home; and extended the CAA’s remit to include the repatriation of Atol and non-Atol passengers.
The scheme would, effectively, make good on the government’s pledge to bring home all passengers in the event of an insolvency episode, and remove the financial burden from the taxpayer.
Asked for his view on these reported new proposals, Aito director of industry issues Noel Josephides told TTG: “We expected that only repatriation would be covered.
“We do think, however, that foreign-based airlines flying from the UK should be included in this repatriation scheme and should be required to offer the same protection to UK consumers as UK airlines.”
Chris Photi, head of travel and leisure at accountancy firm White Hart Associates, said there was “absolutely no appetite” for an all-encompassing protection regime placing additional burden on airlines, adding he believed any solutions should be funded from airlines’ Air Passenger Duty contributions.
TTG understands the government will put its proposals out for consultation in spring/summer, with a view to finalising the new laws by the end of the year.
The Department for Transport said it did not comment on ongoing legislative matters, but confirmed the government did intend to legislate to enhance the CAA’s oversight of airlines in distress following the recommendations of the Airline Insolvency Review and as set out in December’s Queen speech.