BUSINESS NEWS Airline Insolvency Bill is ‘paused’ Ian Taylor


The government confirmed it had “paused” plans for an Airline Insolvency Bill and the legislation may not be revived in a response to a Transport Select Committee report last week. Ministers had pledged to act


on airline insolvency protection following the failure of Monarch Airlines in October 2017, and set up an Airline Insolvency Review to examine the options in 2018. This reported in 2019, just months before the failure of Thomas Cook – the biggest airline insolvency in history. The Transport Select Committee


(TSC) of MPs, led by Huw Merriman, urged the government to introduce an airline insolvency bill in the next session of parliament and set out a framework for handling insolvencies in a report submitted in April. The government said last week that it “partially accepts” the committee’s


recommendations and agreed “we should consider the recommendations of the Airline Insolvency Review” but said it would deliver only “those we deem appropriate”. Though the government said


it would “work to introduce” an Airline Insolvency Bill “as soon as practicable”, it would do so only “if a bill is required”. The admission will disappoint


many in the trade who have called on ministers to act on the recommendations of the Airline Insolvency Review, which proposed an all-flights levy to fund consumer


closed in March. This proposed giving the CAA enhanced enforcement powers against airlines that fail to comply with regulations on consumer refunds. The government noted the


Monarch failed in October 2017


protection against airline failure. The government argued in its


response to the TSC: “We prioritised resourcing critical response work during the pandemic, which meant [the Bill] was paused. Now we are looking towards the recovery of the aviation sector, we must ensure our solutions are fit for today’s aviation landscape.” It pointed out it is working with


the CAA on Atol reform, with a second-stage consultation due “later this year”, and “considering responses” to an Aviation Consumer Policy Reform consultation that


committee’s recommendations on future Covid restrictions on travel, reiterating that the bar for implementing any measures would be “very high” and be “proportionate to the threat”, but gave no details of “the contingency toolbox of options” planned. Merriman dismissed the response


as “disappointing” and “a missed opportunity”, saying: “It will not offer any comfort for travellers.” The government published its


promised Aviation Passenger Charter at the start of this week, outlining “what passengers can reasonably expect from airlines, travel agents, tour operators and airports, and what to do if flights are cancelled or delayed, or baggage goes missing”.


The government has indicated that its enthusiasm for introducing consumer protection for airline failure has waned significantly. It now looks doubtful that the


COMMENT: TAXPAYERS WILL STILL BEAR BURDEN OF AIRLINE FAILURES There is no commitment as to


indicated a desire for the risk of airline insolvency to sit with the industry, not the taxpayer. It therefore commissioned an independent Airline Insolvency


recommendations of the 2019 Airline Insolvency Review will be implemented in the short term – or at all. There have long been calls to


introduce consumer protection against the risk of airline failure. These grew louder following the failures of Monarch Airlines and Thomas Cook, which necessitated a huge repatriation effort at taxpayers’ expense. At the time,


the government travelweekly.co.uk


Review, which recommended: OA new Flight Protection Scheme, which would protect passengers while abroad if an airline became insolvent, at an estimated average cost of less


than 50p per passenger OReforming the UK’s airline insolvency regime so an airline’s own aircraft could repatriate


passengers, should it fail OProviding the CAA with the power and capability to coordinate repatriation


for all sizes of airline O Improving


awareness and take up of safeguards that protect future bookings when airlines collapse. The government announced in


2019 that it would introduce laws to implement these recommendations, but then the pandemic struck and the new laws did not materialise. On April 25, the transport select


committee reminded the government of its commitment and recommended it now introduce legislation to implement the recommendations of the Airline Insolvency Review. On July 11, the government published its response to the committee, which signalled a cooling of its desire to implement the review’s recommendations.


whether any specific aspect of the Airline Insolvency Review will be implemented, and no indication what the process will be for choosing which aspects to implement or the timetable for doing so. It looks highly unlikely the


government will implement the Airline Insolvency Review’s recommendations in the short term – if at all. So consumers who make flight-only


bookings will remain unprotected by an insolvency scheme and the prospect of the taxpayer having to fund another huge repatriation remains.


Rhys Griffiths, partner and head of travel, Fox Williams LLP


21 JULY 2022 55


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