Govt urged to put consumers at heart of airline insolvency review

ABTA has responded to the Government’s announcement outlining the airline insolvency review, saying customers must come first.

The review was announced up following the demise of Monarch last year.

Chief executive Mark Tanzer said: "Reviewing what happens to passengers when an airline goes out of business is a welcome and necessary step by the government.

"ABTA has long-argued that consumer protection hasn’t kept pace with the changing ways in which people can book travel and that there is a need for greater clarity around consumer protection for businesses and consumers alike.

"Many travellers are unaware that if you book a flight directly with an airline you are not protected if the company goes out of business, but if the flight is booked as part of a package or flight-plus, you are.

"The current system is not clear for passengers or the industry, and is inconsistent in its application.

"The Government will need to put consumers at the heart of the review in order to make sure that the outcome delivers the right protection and clarity for passengers and industry. We look forward to contributing to the review."

Under the current system, Package Travel Regulations mean that if an airline fails the tour operator will have to arrange repatriation or a refund.

The ATOL scheme ensures that customers who buy flight-based packages or flight-plus arrangements will be repatriated or refunded if their package organiser fails.

Some flight-only sales are also currently protected, when sold through travel agents or intermediaries. However, it is unclear whether this protection will remain in place following implementation of the revised Package Travel Directive which comes into force on July 1.

ATOL protection does not apply to everything a company sells, it applies to a particular set of travel arrangements.

Companies must, under current law, advertise themselves as ATOL protected – even if the majority of travel arrangements they operate are not protected by the scheme. This can lead to consumers thinking their travel arrangement is protected when it isn’t.

Currently travel companies in ATOL pay £2.50 per passenger to fund the protection scheme.

In October last year, the Government brought home 110,000 customers following the collapse of the Monarch travel company, even though the vast majority of customers were not covered by the company’s ATOL licence.

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