THE Air Travel Insolvency Protection Advisory Committee has called on ministers to reconsider the scheme to extend consumer financial protection to scheduled carriers through a £1 levy on passengers.
Its annual report says ABTA’s withdrawal of a financial protection guarantee has fuelled confusion and the association should make clear the change to consumers.
The Committee advises the transport secretary, the Civil Aviation Authority and the trustees of the Air Travel Trust, which supplements the ATOL bonding system.
ATIPAC chairman John Cox said: “The Government’s failure is leading to a feeling the Wild West is taking over.”
He added: “Businesses are behaving as you would expect when the rules are not clear and ATOL holders are building their non-ATOL business.”
The ATOL system would collapse if major operators pulled out, he said, expressing anger that the Government bowed to pressure from airlines.
“We thought the proposal offered cheap, comprehensive self-insurance at less than half a pint of beer,” said Cox.
“The airlines argued against the levy, saying they wouldn’t go bankrupt. Tell that to the US airlines in bankruptcy protection.”
Cox said ABTA’s abandonment of financial protection made commercial sense. “But it has gone back on its promise to consumers over 30 years.”
The ATIPAC report stated: “It is essential ABTA provides clear and unambiguous information. The industry faces a difficult time in educating consumers.”
Cox added: “Business conditions have become more difficult. All this could be solved by a £1 levy on all UK-originating passengers. We have to go back to the Government.”
Claims on the ATT in the year to March were the highest since 1997.
The number of passengers taking ATOL-protected flights fell 2.6% to 27.3 million, and the proportion of air travellers protected by ATOLs was down to 61%, compared to 85% in the mid 1980s.