Airline passengers face new ticket fee to cover cost of carrier collapses

Airlines have hit out at proposals to charge passengers an extra 50p to pay for the cost of repatriating travellers who have been stranded following a carrier collapse.

The government's insolvency review, which was set up by the Department for Transport (DfT) following the collapse of Monarch in 2017, has suggested the UK set up a "flight protection scheme" to help pay for passengers to fly back to the UK if there are left stranded by an airline collapse.

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Peter Bucks, who led the review, said a flight protection scheme would create a "level playing field for all UK-originating passengers, providing reasonable assurance of repatriation protection whether or not they hold an Atol [Air Travel Organiser’s Licence Certificate]."

Atol was first introduced in the 1970s, when the popularity of overseas holidays grew. The certificate protects around 20m holidaymakers each year who have booked package holidays with a travel operator. Now the government wants to protect passengers whose holiday may not be covered by Atol.

Under the proposals, all airlines serving the UK market will have to pay for financial protections to cover the estimated cost of repatriating their passengers back to the UK in the event of insolvency. This cost will be passed on to passengers an an estimated cost of 50p per ticket.

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Airlines have hit out at the proposals.  Tim Alderslade, chief executive of Airlines UK, which represents carriers such as British Airways, EasyJet and Ryanair, said: “Airlines face rising costs and this is not the time to make it more expensive to travel. 50p may not sound much but airlines operate on wafer thin margins and passengers already pay over £3bn each year to the Treasury in air passenger duty.

"The chances of booking with an airline that goes bust remain extremely small. When it’s happened, airlines have demonstrated their commitment to bringing passengers home through voluntary rescue fares which worked extremely well and without any taxpayer liability.”

John de Vial, director of financial protection at the travel association ABTA , welcomed the proposals.

“It is good to see that the review has recognised that there is a gap in consumer protection when an airline goes out of business," he said.

“ABTA has highlighted for quite some time that the current system is confusing and inconsistent for both customers and travel businesses."