Abta’s Aviation Forum on Tuesday (25 April) heard how Abta members were broadly in favour of the proposals, while the airline sector was opposed.
Rachel Jordan, Abta director of financial protection and membership, said: “There seems to be a preferred route of segregation for businesses. Some are delighted, but a lot of members do not [currently] segregate at all.”
But Simon McNamara, Iata UK and Ireland country manager, said: “We are against it, particularly when tickets are issued and particularly when issued to BSP. Iata is not a bank.”
He claimed the airline industry was low risk. “There are plenty of protections out there. Airline bankruptcy risk is low, it doesn’t happen very often. Iata does its own risk management so protections are there.”
He added airline licensing processes were another safeguard. “To get an operating licence you have to demonstrate solvency. There are protections that apply only to airlines.”
McNamara said one urgent need for reform was the way in which airline failures were handled. The UK, he said, was “fairly unique” when it came to airline failures.
“We place bulldozers in front of aircraft," he continued. "The US has Chapter 11 [bankruptcy protection] and when Air Berlin collapsed, the government stepped in. UK bankruptcy laws are unique and that is a problem that could be tackled.”
Both Abta and Iata believe the issue of airline insolvency should be looked at separately from Atol reform. They also expressed concerns about the timescale for reform given the likely 2024 general election.
The CAA had hoped to introduce part of the changes next April, but Jordan said: “The timescale is already challenging. It’s difficult to see what could happen in order for change by April 2024.”
Abta’s director of public affairs, Luke Petherbridge, said the timescale was also tight if the CAA approved a variable Atol Protection Contribution to replace the current £2.50 flat fee, which has broad industry backing.
“APC would need primary legislation – you are looking at a very, very difficult timeline,” he said. Jordan added there was “quite a lot of support” for a variable APC “but a lot of questions how that would work”.
