While the government felt the political pressure to bring home so many people who were stranded abroad, the case also highlighted the discrepancy in consumer protection between those who have booked packages and those who just booked a seat on the plane. Nearly 90% of passengers were in the latter category. For them to be brought home on the same terms as those who had paid for protection through the Atol scheme could be seen as undermining the value of buying protected travel.
Abta called for a review of the rules when such companies collapse, so we were glad when the government announced it was setting up an independent review of airline insolvency to look into how the system might be reformed. The review, chaired by Peter Bucks, an expert in regulatory issues, published a call for evidence earlier this year. Abta fully consulted all our members on what they thought should change.
In our response to the call for evidence, we didn’t advocate a single option. Instead we set out five design principles we think should set the framework for a future schem
These are:
- Giving consumers transparency and clarity around consumer protection.
- Preventing market distortions between competing businesses – in particular, not allowing a new rule to fall only on UK airlines and travel organisers in a market where consumers are served by carriers from other jurisdictions.
- Avoiding duplication of consumer protection costs, and additional cost burdens for businesses currently providing protection.
- Providing all purchasers of airline seats with equality of protection – consumers, business travellers, travel agents/intermediaries and organisers.
- Making sure funds are immediately available in the event of failure to pay for repatriation.
Since then, we have been actively involved with the review, sharing our expertise and putting members’ views across. John de Vial, our director of financial protection, has participated in two public evidence sessions, drawing on his and Abta’s experience in protecting travel and what should happen when travel companies fail.
We are waiting for the review to publish their interim report in mid-July before parliament breaks up for the summer. That should give us a sense of what a future scheme might look like and allow us to try to shape the final report, which comes out at the end of the year.
At a time when the volatility of the aviation market is regularly in the newspapers, the time is right for a new regulatory approach when airlines go under. Whatever option is ultimately suggested by the review, what is most important is there is clarity for customers and fairness for travel firms at the end of the process. The time to act is now to make sure the lessons of Monarch are learnt before any future failure hits the industry.
Alan Wardle is director of public affairs at Abta
