Watchdog wants protection against airline failure

[October 22nd 2008]

Airport scene

As airlines continue to go bust, the Air Transport Users Council has written to the new Transport Secretary Geoff Hoon urging him to reconsider financial protection for scheduled airline passengers.

The Air Transport Users Council (AUC) is the consumer watchdog established by the Civil Aviation Authority (CAA) to help protect the interests of air travellers. It has been pressing the government for a number of years to introduce a scheme that would protect passengers in the event of scheduled airlines going bust.

In 2005, the AUC supported the CAA’s detailed proposal to the government for a financial protection scheme that incorporated protection against the failure of scheduled airlines, but the government declined to take the proposal forward.

The AUC says the government has relied on airline passengers getting protection through their travel insurance or by using a credit card when they make their booking.

“But few travel insurance policies offer cover against the failure of schedule airlines, and some of those that do, have exclusions that appear to potentially dilute the cover. In addition, many passengers do not pay for flight tickets with a credit card; they may not own one or they may wish to avoid credit card charges,” the AUC says in a press statement.

The AUC believes the time is now right for the government to take another look at a protection scheme. “The current economic climate and the increasingly competitive nature of the industry raises the spectre of a greater likelihood of airline failure, as demonstrated by the recent failures of Zoom and XL,” the watchdog states.

AUC chairman, Tina Tietjen, says: “The AUC’s previous position in respect of scheduled airline failure has been that protection should be provided via a flat fee levy on all passengers paid into a common fund. This levy would cover passengers for reimbursement of monies and, for those already abroad, completion of holiday and return home”.

“We continue to hold this view and urge the government to give detailed consideration to extending financial protection for air passengers, to include the failure of scheduled airlines”.

Written by: Nick Purdom


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Watchdog Wants Protection Against Airline Failure