Secretary of state for transport Chris Grayling hinted further reform of the Atol scheme could come as the result of the collapse of Monarch Airlines last week.
In a statement to the House of Commons yesterday on the collapse of the UK fifth biggest airline, Grayling said it would look at all options.
This includes how airlines might in the future be ‘wound down in an orderly manner’ so customers can be helped without government support.
The Monarch collapse prompted the biggest peacetime repatriation in the history of the UK to bring home the 110,000 customers who were overseas.
This will see the government effectively run an airline for two weeks operating 700 flights on 35 aircraft and involving 40 airports and 267 coaches.
Grayling told parliament that the collapse should be seen as caused by problems in the aviation sector.
The loss of a major British brand, which was close to celebrating its half-century, is undoubtedly a sad moment. However this should not be seen as a reflection on the general health of the UK aviation industry, which continues to thrive.
He said: “We have never had the collapse of an airline or holiday company on this scale before. We have responded swiftly and decisively.
“Right now our efforts are rightly focused on getting employees into new jobs, and passengers home.
“But then our efforts will turn to working through the reforms necessary to ensure passengers do not find themselves in this position again.
“We need to look at all the options, not just Atol, but also whether it is possible for airlines to be able to wind down in an orderly manner and look after their customers themselves without the need for government to step in.
“This is where we will focus our efforts in the weeks and months ahead.”
Grayling said constructive talks had taken place with credit and debit card firms as well as other travel companies to recoup some of the £60 million cost of the repatriation.
He said he was “aware of the duty this government has to the taxpayer” after the government decided all Monarch customers should be repatriated free of charge whether covered by Atol or not.
“Normally, the CAA’s responsibility for bringing passengers back would extend only to customers whose trips are covered by Atol,” Grayling said.
“However this is the largest airline failure in UK history and there would have been insufficient capacity in the commercial aviation market to enable passengers to get home on other airlines.
“With tens of thousands of passengers abroad and with no easy means of returning to the UK, I therefore instructed the CAA to ensure all those currently abroad were offered an alternative flight home.”
Grayling added the government has “entered into discussions with several third parties with a view to recovering some of the costs of this operation”.
“The Atol scheme will of course provide the financial cover for those with Atol protection,” Grayling added.
“We are currently engaged in constructive discussions with the relevant credit and debit card providers in order that we might recoup from them some of the cost to taxpayers of these repatriation flights.
“We are also having similar discussions with other travel providers through which passengers may have booked a Monarch holiday and I would like to thank them for their constructive behaviour and approach.”
Grayling praised the CAA for its handling of the collapse which he said came about because the Monarch board took the decision to place the airline into administration.
“I have seen first-hand the work being done across government and the CAA to make this operation a success and spoken to some of the passengers who have returned to the UK on government flights.
“I have been hugely impressed by what I have seen and the response from passengers has been overwhelmingly positive – with many praising the CAA and government themselves for a well-organised and professional response.”
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Monarch failure: Government to pay bulk of repatriation costs