A flight protection levy of up to 50p a passenger is part of planned changes to airline insolvency rules following the collapse of Monarch Airlines.

Passengers rather than the taxpayer are to shoulder the cost of repatriating stranded customers as part of government plans for dealing with future airline failures.

The proposal for a Flight Protection Scheme levy of “less than 50p” per person is part of a series of recommendations in the Department of Transport’s Airline Insolvency Review, which was commissioned following the collapse of Monarch Airlines in October 2017.

Monarch’s failure meant 85,000 passengers had to be repatriated by the Civil Aviation Authority in the largest peacetime operation of its kind. It also had to rescue XL Airways customers in 2008.

Lack of protection

Other recommendations include the use of an airline’s own aircraft to repatriate passengers should it fail. The review also wants to improve awareness and take up of safeguards which protect customers when airlines collapse.

Around 80% of passengers who book outbound flights from the UK have some form of protection enabling them to recover the money they paid for tickets that have subsequently become worthless because of airline failure.

However, only those 25% who have bought a travel product protected by the ATOL scheme are assured of being able to get home in a timely way at little or no extra cost. This leaves around 75% of passengers who would need to access and pay for alternative travel arrangements.

Industry rescue fares

Peter Bucks, chair of the Airline Insolvency Review, said: “We know passengers expect to be protected from being stranded overseas if their airline should collapse, but in practice, each year many people fly without any such protection.”

The moves, which are subject to consultation, have been criticised by the airline industry. The Board of Airline Representatives in the UK said the recent failure of WOW Air required no financial intervention from the CAA, with 13 airlines offering rescue fares under an industry voluntary agreement. It also questioned the cost and administration of the proposed levy.

Tim Alderslade, chief executive of Airlines UK, added: “50p may not sound much but airlines operate on wafer thin margins and passengers already pay over £3 billion each year to the Treasury in Air Passenger Duty. The chances of booking with an airline that goes bust remain extremely small.”

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