So it’s finally happened. Two-and-a-half years after the demise of Monarch and five months on from the collapse of Thomas Cook, the government is taking steps to protect airline passengers in the event of a company’s failure.
New proposals from the Department for Transport are being discussed that would force all scheduled airlines in the UK to offer financial protection, TTG can exclusively reveal.
Passengers would only be covered for repatriation, meaning the Atol scheme, which also covers refunds for booked holidays, would remain relevant.
But this is still a noteworthy step, and one which could have a significant impact on the industry – not least the airlines.
They, of course, are unlikely to take such changes lying down. When the issue was last raised in 2010, larger airlines angrily questioned why they should have to pay into a scheme likely to benefit only failing companies.
Their argument was simple: we’re too big to fail, so why should we prop up those who aren’t?
The problem is the collapse of both Monarch and Cook has shown no one is too big to fail. Just because a company is healthy now, it doesn’t mean it will stay that way.
Many in travel will welcome these proposals. It is a chance, finally, to level the playing field between Atol-paying tour operators and non-Atol-covered airlines. But there are important questions to be asked during the consultation period later this year.
Key is who will pay for this protection – airlines or consumers? As accountant Chris Photi drily points out on page 7, perhaps it should be neither – surely this is, instead, the perfect gap for APD to fill...
Also, is it really fair only UK carriers are included in this? It undoubtedly places them at a competitive disadvantage to their foreign counterparts.
The unpleasant irony would be if these reforms only succeeded in making the playing field more uneven.