Consumer protection for airline insolvency: delayed and possibly cancelled

This article was originally published by Travel Weekly on 21 July

The UK Government has indicated that its enthusiasm for introducing consumer protection for airline failure has waned significantly. It now looks doubtful that the recommendations of the Airline Insolvency Review will be implemented in the short term, or even at all.

There have long been calls to introduce consumer protection against the risk of airline failure. These calls grew louder following the failures of Monarch Airlines and Thomas Cook Airlines, which necessitated the government undertaking a huge repatriation effort at the taxpayer’s expense.

At the time, the government indicated its desire to see the risk of airline insolvency sit with the industry and not the taxpayer. It therefore commissioned an independent Airline Insolvency Review, which recommended:

• A new Flight Protection Scheme, which would protect passengers if an airline became insolvent while they were abroad. It was estimated that the cost of the protection would amount to less than 50 pence per passenger on average

• Reforming the UK’s airline insolvency regime so an airline’s own aircraft can be used to repatriate its passengers should it fail

• Providing the Civil Aviation Authority with the necessary powers and capability to coordinate repatriation operations for all sizes of airline

• Improving awareness and take-up of safeguards that protect the future bookings of customers when airlines collapse.

The government announced all the way back in 2019 that it would introduce new laws to implement these recommendations, but then the pandemic struck and so the new laws did not materialise.

On 25 April 2022, the House of Commons Transport Committee reminded the government of its earlier commitment and recommended that the Government “must” now introduce new legislation to implement the recommendations of the Airline Insolvency Review (the Transport Committee’s report is summarised here).

On 11 July 2022, the government published its response to the Transport Committee report, which signalled a real cooling-off of its desire to implement the recommendations of the Airline Insolvency Review saying that it will only “consider” the recommendations and “deliver on those we deem appropriate”.

No commitment is given as to whether any specific aspect of the Airline Insolvency Review will be implemented, what the process will be for choosing which aspects to implement, or the timetable for doing so.

It now looks highly unlikely that the Government will introduce the recommendations of the Airline Insolvency Review in the short term or possibly at all.

This means that consumers which purchase flight-only will not be protected by an insolvency scheme if the airline fails, meaning that the prospect of the taxpayer having to fund another huge repatriation effort remains.