Report proposes 50p levy to protect passengers from airline failures
A long-awaited report following the collapse of Monarch has proposed a levy of up to 50p per passenger to protect customers from future airline failures.
The plans were announced today in the UK Government’s Airline Insolvency Review, which was instigated after Monarch failed in October 2017.
Tim Alderslade, chief executive of Airlines UK, the industry association that represents 13 UK-registered carriers, said this would simply push up the cost of flying.
"Airlines face rising costs and this is not the time to make it more expensive to travel," he said.
"50p may not sound much but airlines operate on wafer thin margins and passengers already pay over £3 billion each year to the Treasury in Air Passenger Duty.
"The chances of booking with an airline that goes bust remain extremely small. When it’s happened, airlines have demonstrated their commitment to bringing passengers home through voluntary rescue fares which worked extremely well and without any taxpayer liability."
The Board of Airline Representatives in the UK (BAR UK) said the report overstates the risk of an airline failure of the scale of Monarch, when the Government had to intervene and being stranded passengers home.
Chief executive Dale Keller said: "The European Commission estimates that between 2011 and 2020, only 0.07% of all passengers across Europe could be affected by airline bankruptcy, and of them, only 12% would require organised assistance in getting home.
"The recent failure of WOW Air required no financial intervention from the UK regulator, the CAA, and 13 airlines offered rescue fares to WOW Air passengers under an industry voluntary agreement.
"Whilst we fully support a package of measures to enhance procedures and improve consumer awareness of the protection available to them, we do not support a passenger levy to build a fund since the vast majority of consumers who contribute in higher airfares would never receive any benefit.
"The real costs of collecting and administering the proposed 50p per passenger are likely to be significantly greater and the Airline Insolvency Report does not go into the complexity of how such a levy should be collected only on UK originating return journeys, or how the fund would be administered."
Agents said the proposals were a ‘step in the right direction’ but ‘not a perfect solution’.
Ken McLeod, president of the Scottish Passenger Agents’ Association, said it is concerned there will be challenges in administering the scheme, such as suggesting airlines may not have to protect passengers who have bought their ticket under the ATOL scheme.
"How will airlines know which is an ATOL-sold seat?" he said.
"The simplest answer is that all seats should be protected, even though they may be protected twice by different organisations, in that the airline provide cover for their part and the tour operator provides for the whole package under the ATOL scheme."
Bev
Editor in chief Bev Fearis has been a travel journalist for 25 years. She started her career at Travel Weekly, where she became deputy news editor, before joining Business Traveller as deputy editor and launching the magazine’s website. She has also written travel features, news and expert comment for the Guardian, Observer, Times, Telegraph, Boundless and other consumer titles and was named one of the top 50 UK travel journalists by the Press Gazette.
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