New financial protection rules by end of 2005?

NEW rules to broaden the financial protection for holidaymakers could become law by the end of next year, it has emerged.

Parliament’s Transport Committee chairwoman Gwyneth Dunwoody predicted a voluntary bonding scheme for airlines could be introduced next summer with legislation following by Christmas.

She said the issue had become “terribly important” as increasing numbers of consumers book “bits” of packages – such as flights and hotels – which offer consumers no financial safeguards whatsoever.

New legislation would expand protection to include scheduled airline seats and, in all probability, accommodation only.

Speaking in a videoed interview with Association of Independent Tour Operator’s chairman Richard Hearn and shown at AITO’s conference in Dubrovnik, Dunwoody said: “Everyone wants to see a good deal for the customer. We need to make sure customers are protected, customers are well informed and ultimately that the system works for everyone’s advantage.”

She added: “Consumers book in different ways now and buy bits of holidays. If, heaven forbid, they should find themselves stranded somewhere, it comes as a bit of a shock when they realise they are not covered for scheduled flights.

“Frankly, there’s an awful lot of airlines that are at risk and lots of customers could find themselves in really rather difficult situations.”

Ms Dunwoody stressed the government was “showing goodwill” and taking the issue seriously after being “a tiny bit, dare I say, blasé”.

“They did not think it was terribly important,” admitted Ms Dunwoody.

Asked about a timeframe, she said there was no reason why a voluntary bonding scheme could not be in place by the summer and on the statute books by Christmas.

Consultations, spearheaded by the Civil Aviation Authority, are continuing and expected to be completed early in 2005.

Despite Ms Dunwoody’s confidence, senior AITO members doubted the reality of such a timetable and called for a change in their own self-imposed bonding scheme if legislation does not arrive within 12 months.(see separate story on Travelmole).

Doubts whether a voluntary scheme was workable were also raised when GB Airways’ John Morgan told delegates the carrier would not contribute.

“We are incredibly financially sound,” he said. “Why is it fair that everyone should pay for a threat which only applies to a small number?”

The fear of an expected “bloodbath” with airlines going bust was now fading, he said.