Report on Monarch collapse confirms existing protection is flawed

An interim report into the collapse of Monarch Airlines has accepted shortcomings with the existing protection arrangements.

The government commissioned report, published yesterday, says too many air passengers are flying without adequate protection against an airline going bust, or are paying twice for the same protection.

The report admitted the current system is often confusing and needs updating, but said it is sceptical it will find a solution to protect the taxpayer fully from the risk of intervention if a larger airline fails.

The Department of Transport has set out a timeline for further action, with stakeholder workshops scheduled for the autumn and a final report due to be handed to the Secretary of State this winter.

The Government says it will explore whether there may be scope for consolidating the ATOL scheme into any new arrangements.

Or, it might reduce the scope of ATOL to cover simply the remaining elements of the package holiday not covered by the protections recommended by the review.

"Depending on the outcome of such deliberations we will also consider what further measures can be taken to put the remaining ATOL arrangements on a more commercial basis," said the report.

ABTA chief executive Mark Tanzer said: "It is good that the review has confirmed there is a problem with the existing protection arrangements if an airline goes out of business.

"ABTA has been highlighting for some time that the lack of any formal protection arrangements for scheduled flights leaves many passengers at risk, and the Government and taxpayer with a potential repatriation cost. This review is an opportunity to set this right.

"We’re pleased that the review team is engaging with industry and look forward to continuing to work with them to come up with concrete proposals."

ABTA is putting pressure on the Government to prevent market distortions between competing businesses, in particular not allowing any new rules to fall only on UK airlines and travel organisers in a market where consumers are served by carriers from many other jurisdictions.

It also wants to make sure any measures avoid duplicating consumer protection costs, and additional cost burdens for businesses currently providing protection.

It says any new arrangements must make sure funds are immediately available in the event of failure to pay for repatriation.

The report, however, was criticised by UK pilots’ union BALPA, saying it was disappointed Monarch staff were not considered.

BALPA general secretary Brian Strutton said: "BALPA is disappointed the review into the collapse of Monarch has focussed solely on passengers and taxpayers, with no thought given to the staff who lost their jobs.

"Monarch’s 3,000 staff were kept totally in the dark, they only heard their company had gone under through news reports, and were then told to call a premium rate phone number in order to hear they had been made redundant. And of course they lost earnings and pensions.

"It is important to protect passengers from any future airline collapses, but BALPA urges the Department for Transport to also consider measures to protect staff."