Industry in state of confusion over customer protection, says report

The travel industry is being taken over by the ‘wild west’ due to confusion over customer protection, according to the latest report by the Air Travel Insolvency Protection Advisory Committee (ATIPAC).

In its sixth annual report, the body criticised the government for not acting on the CAA’s advice to extend financial protection to all air travellers flying from the UK on international flights by introducing a £1 passenger charge on air tickets.

Chairman John Cox said: “The Committee finds it hard to comprehend that the government missed such a golden opportunity to provide real clarity and protection to consumers.

“The failure of the government to take action last autumn, coupled with a further decline in the coverage of the ATOL system, is leading to a feeling within the industry that the ‘wild west’ is in the process of taking over.

“Some tour operators are now reorganising their businesses to avoid the ATOL regulations and leaving their customers without financial protection. This is profoundly worrying. The confusion that surrounds financial protection is only getting worse, with many consumers assuming they are covered, when in fact they are not.”

Following its decision not to pursue protection for all flights, the government asked the CAA to consult with industry as to whether a passenger charge should be introduced to replace the current ATOL bonding system.

In April the CAA issued a consultation document which considered the feasibility of replacing bonding with a £1 charge in respect of booking ATOL flights or packages.

“The committee urges the government to respond immediately to the results of the CAA’s latest consultation on reforming ATOL bonding. Action should be taken quickly to ease the financial burden on tour operators and ensure that a clear message about protection can be communicated to the public as soon as possible,” said Cox.

The Civil Aviation Bill, which includes powers to replenish the Air TravelTrust Fund, is expected to gain Royal Assent later this year.

Subject to secondary implementing legislation, this would mean the introduction of a per passenger protection charge.

The ATIPAC said this development was a long overdue first step but believes it still does address the wider issue of comprehensive protection.

The committee was established by the Secretary of State for Transport in 2000 to provide advice to the CAA, the Trustees of the Air Travel Trust and the Secretary of State for Transport on the financial protection arrangements for travellers.

The committee’s members include representatives of all the main travel trade bodies, the CAA and independent and consumer representatives.

By Bev Fearis