The Federation of Tour Operators has called on the Government to extend consumer financial protection to scheduled airline passengers following a spate of failures among carriers.

When all-business class airline Silverjet failed last month, most passengers were left stranded or out of pocket. However, sales of package holidays carry a money-back guarantee and have done for three decades.

The Government ruled out extending the scheme to all airlines two years ago, despite lobbying by the Civil Aviation Authority and Air Transport Users Council. Instead, ministers bowed to pressure from major airlines which argued carriers rarely fail and that consumers have no protection against a company failure when buying a sofa or other major purchase.

But now the soaring oil price is leading to failures every week. Ryanair boss Michael O’Leary has warned that almost any carrier in Europe bar the biggest six are in danger and airline association IATA has predicted industry losses of up to $6 billion this year.

FTO director-general Andy Cooper said: “It is high time our government and regulator put in place proper protection for citizens. Stranded families and financially disadvantaged travellers will neither forgive nor forget a government which waited for a major airline collapse before acting.”

However, the CAA said it did not expect ministers to revise their opinion. The CAA oversees the Air Tour Organiser’s Licence (ATOL) scheme that levies a £1 ATOL Protection Contribution on every licensed tour-operator sale. The scheme was introduced in April, replacing an older bonding system.