Passengers could face new flight levy to cover airline failures

28.7.2010 (Telegraph)

Airline passengers could face a £1 levy on plane tickets to fund a scheme to
get holidaymakers home when a carrier collapses

Under current arrangements protection – under the Air Travel Operators Licensing
scheme (ATOL) scheme – is limited to those who have bought a package holiday.

There is a growing belief in Whitehall that the arrangements have not kept up
with the "do it yourself" holidays, in which families put together their own packages
via the internet.

Philip Hammond, the Transport Secretary, made clear that the Government was ready
to overhaul the current scheme when he appeared before MPs earlier this week.

"We clearly have a problem with the ATOL scheme", he told the Transport Select

"Over the last few years the way in which people buy holidays has changed," he

"The use of the internet, the use of a much more à la carte approach to purchasing
flights and accommodation has made the clear distinct between what is a package
holiday and what is not a package holiday much less clear".

Mr Hammond said that a extending the ATOL scheme to plane tickets was an option
under consideration.

Previous proposals drawn up by the Civil Aviation Authority under the last Government
would have added £1 to the cost of each trip.

It was drawn up following a serious of airline collapses, including Zoom, XL,
Maxjet, Silverjet and Eos.

Last year nearly 200 million flew abroad from British airports last year.

But the levy, if introduced, would only apply to those passengers who bought
their tickets in the United Kingdom.

Ministers are also considering a compromise proposal in which the ATOL scheme
would be extended to cover people who bought a flight and one other component
– such as accommodation or car hire – from the same internet site or tour operator.

The willingness of the Coalition to revisit the scheme was welcomed by the Air
Transport Users Council.

"We believe there is a need for a universal scheme which would include protection
for when a scheduled airline went bust. A levy would be the most practical way
of doing this.

"Our own research has shown that less than a third of passengers even know they
have any protection or not.

"It can lead to a pretty unpleasant shock and a hefty bill for a passenger when
an airline fails.

"In the past when a carrier has failed, airlines have offered ‘special repatriation’
fares, but there is no guarantee they will next time."

The proposed levy was condemned by British Airways. “We would resist any move
to be included in such a scheme as charging passengers an additional fee will
put up prices for everyone to protect the minority affected by scheduled airline
failure,” a spokesman said.

“We are a well established airline and it would be unfair if our customers had
to fund compensation for those who choose to travel on less established airlines.

“Due to our passenger numbers, our customers would pay a considerable share of
the funding to provide protection against other airlines’ bankruptcy.



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