Renewed call for scheduled airline failure protection
A call has been made to end a “two tier†passenger protection situation which allows scheduled airlines to fly passengers without any financial safety net against failure.
The Air Travel Insolvency Protection Advisory Committee (ATIPAC), a body which advises the Civil Aviation Authority, highlighted the failure of UK business class carrier Silverjet and US rivals MAXjet and Eos in the last seven months.
The committee, in its eighth annual report, said the failures demonstrated the “significant financial†loss passengers can be exposed to in the event of an airline going out of business.
Chairman John Cox raised ATIPAC’s “significant concern†over the lack of financial protection for air travellers booking direct with a scheduled airline.
He said: “Airlines are not providing suitable protection and advice for their passengers.
“Information about financial protection is negligible and, in the event of an airline failing, passengers often have no choice but to pay their own repatriation costs.
“Those yet to travel will often have to pay for replacement flights or face losing the value of any pre-paid element of their holiday.
“Passengers travelling with an ATOL-protected tour operator face none of these risks and will be repatriated at no additional cost or receive a full refund if they have yet to travel, should their tour operator cease trading.
“This two-tier protection system must not be allowed to continue and the Committee reiterates its call for airlines to be brought into a financial protection scheme.”
However, the committee congratulated the Government on its decision to introduce the ATOL Protection Contribution.
Cox said: “The committee has been calling for this reform since its inception in 2000.
“Over the past year we have been carefully monitoring and advising the CAA and have been reassured by the work they have done with industry to make the introduction of the APC seamless and trouble free.
“The introduction of the £1 per passenger APC simplifies the regulatory process and in most cases eliminates the need for ATOL holders to provide a bond.
“The introduction of APC will also mean that the Air Travel Trust Fund (ATTF), which is used to pay refund and repatriation costs, will gradually be restored to a healthy and sustainable balance, from its currently overdrawn state.”
*In the year to 31 March 2008 there have been 25 failures, two fewer than the previous year.
The largest failure was Travelscope Holidays which failed in December 2007, just before Christmas. Although only three passengers required repatriation, a further 16,000 had to be refunded. The total cost was £3.2 million and the bond provided by Travelscope was sufficient to cover this.
ATOL enabled 1,650 customers of failed tour operators to continue their holidays and travel home and refunded a further 20,771 who had made advance payments but had yet to travel.
by Phil Davies
Phil Davies
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