As the House of Lords is set to debate a bill on a new ATOL scheme today, ABTA has called on the government to ensure taxpayers aren’t left to foot the bill when airlines collapse, as was the case in the failure of Monarch earlier this month.
Following the CAA’s repatriation scheme, a £60 million tab was hefted onto taxpayers, as the majority of Monarch’s passengers were not covered under current ATOL regulations. ABTA commented in a statement that the government’s decision to repatriate Monarch customers regardless of whether their tickets were ATOL protected “highlights severe flaws in the current regime”.
Transport secretary Chris Grayling told the House of Commons that the airline’s owner, Greybull Capital, has a “moral obligation” to help pay for flying customers home, but admitted the government has no power to force them to do so. He also committed to consider potential reforms, which ABTA has welcomed.
“The ATOL scheme is designed to ensure that customers who buy package holidays will be repatriated or refunded at no extra cost if the organiser of their holiday fails. However, ATOL does not offer protection to customers who buy airline seats directly from carriers or through aggregator sites. In the case of Monarch, this was the vast majority of the passengers who were stuck overseas and had to be brought home by the government.”
ABTA says the bill being debated today creates an opportunity to change legislation in order to protect customers in the event of another airline collapse, praising amendments proposed by Lord Rosser that would ensure coverage for all passengers. It calls for any new scheme to limit the likelihood of future failures causing a cost to taxpayers.
“ABTA believes the government should consult with the industry and consumers to determine the precise model for delivering any new consumer protection scheme, for example through insurance or a parallel ATOL scheme for airlines.”