20 November 2008

New call for airlines to provide failure insurance

A leading travel insurance provider is calling on more airlines to offer cover against failure.

Mondial Assistance has stepped into the debate over passenger protection cover in the wake of numerous airline collapses this year, including XL Airways and Sterling which left many travellers out of pocket.

The Air Transport UsersÃ¢â¬â¢ Council is pushing for the Government to introduce protection for passengers in the event of a scheduled airline going bust.

With more people choosing to travel independently, rather than booking through an ATOL-bonded operator or ABTA agent, the economic climate means many are vulnerable to airline failures, Mondial warned.

Mondial has a number of airlines among its clients and is asking others to follow their lead and offer consumers airline failure cover as standard.

UK sales director Ben Smart said: Ã¢â¬ÅâœIt is clear that consumers need more protection from the risk of airline collapse.

Ã¢â¬ÅâœAlthough some insurers do not pay out in the event of an airline failure, others have provided this level of cover for its travellers for some time.

Ã¢â¬ÅâœAs the economic downturn continues to put pressure on businesses, it is essential that consumers are covered for potential losses.

Ã¢â¬ÅâœIt is important that airlines meet the needs of their customers by providing comprehensive cover to suit the demands of todayÃ¢â¬â¢s market.Ã¢â¬~

He added: Ã¢â¬ÅâœWe hope to see more insurers and airlines implement greater passenger protection during the tough economic times ahead.Ã¢â¬~

by Phil Davies

Post your comment

Your Comments (5)

Compulsory offer - Yes, compulsory purchase - No

Mondial as an insurance company have a serious conflict of interest in lobbying Govt for consumers to have compulsory insurance. A public advertising campaign to explain what happens if an airline fails would help, but nobody like things being forced on them. Compulsory travel insurance purchase went down badly - the same applies to compulsory airline failure insurance.

By david johndon, Friday, November 21, 2008
Tough turkey

I agree wholeheartedly with Guy Novik. In these difficult times we need every advantage we can get. "Caveat Emptor" to those people daft enough to think that they know better than a travel professional. I am all in favour of more airlines going bust and leaving the unprotected stranded. If only we could get the press on our side too by screaming at them that no matter who goes bust - with ABTA and ATOL licenced agencies you are still covered.

By Alexander Carraro, Friday, November 21, 2008
Please wake up and smell the coffee

The demise of XL has dramatically increased the public awareness and value of booking through an ATOL holder. This is a clear tangible reason for customers to book through tour operators and their appointed travel agencies, rather than the DIY approach. If we force airlines into offering the same financial protection, the new 'level playing field' would remove our advantage. Consequently, I for one will be lobbying to get this issue kicked into the 'long grass' where I'm hoping it will remain indefinitely.

By Guy Novik, Thursday, November 20, 2008
Insurance Costs: Holding Ticket Money in Trust is Free

Obviously Mondial is looking out for more business. And there is a cost to their proposal. Time to go for the cheapest option: hold passenger fees in escrow / trust only to be released to the airline when a flight departs. Of course the air carriers will complain as they are using today's ticket purchases to fund today's flights. They will have to adjust to today's realities and run their business as others do.

By Jon Hewson, Thursday, November 20, 2008
Will airlines admit they may go bust

The only problem with this is that airlines will not want to flag up that may go bust since they feel this is anti sale. Also unlike genric airline failure cover it is much more likely an insurer who is exposed to 100% of the claims if an airline fails will just cherry pick the safe airlines and pull the cover if an airline looks wobbly long before they go under. It would be interesting to see Mondial's client list. I suspect it may be very blue chip!!!

By Steve Endacott, Wednesday, November 19, 2008