Published on Thursday, December 19, 2019

Government commits to reform airline insolvency process

ABTA has welcomed a commitment in the Queen's speech to reform the airline insolvency process following recent failures, including Thomas Cook Airlines and Monarch.

Boris Johnson's new government said the law would be changed to protect passengers in the event of an airline going bust.

The government envisages introducing a mechanism to make it easier for the CAA to grant insolvent airlines a temporary operating licence so they can repatriate passengers.

When both Monarch and Thomas Cook collapsed, the government stepped in to bring passengers home, spending tens of millions on requisitioning aircraft from other airlines after Monarch and Thomas Cook aircraft were impounded.

The government also plans to increase the CAA's oversight of airlines in financial difficulty to reduce the likely impact of future failures, and also put the CAA in charge of repatriating both ATOL and non-ATOL protected passnegers.

ABTA chief executive Mark Tanzer said the government's decision to repatriate passengers who had booked flight only deals with no financial protection following the collapse of both Monarch and Thomas Cook had undermined the package holiday sector 'by incentivising consumers towards unprotected arrangements'.

He added: "ABTA has long argued for clarity regarding airline insolvency arrangements and welcomes the commitment in The Queen's Speech to bring forward legislation.

"This is a complex issue, as was recognised by Peter Bucks in the Airline Insolvency Review recommendations, and should include a full consultation to provide a solution as confusion regarding the protection provisions is damaging to customers and businesses alike."


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