The Air Travel Trust fund which underwrites Atol protection for package holidays recorded a £170-million surplus at the end of March despite the biggest-ever repatriation of UK air passengers last October.
The annual report of the Air Travel Trust (ATT), published on Thursday, shows the repatriation following of Monarch passengers following the group’s failure on October 2 cost the fund £16 million.
But the overall operation to repatriate 110,000 Monarch passengers, carried out by the CAA on the orders of the Department for Transport, cost £60 million – with the government picking up the remaining bill.
Most Monarch passengers did not have Atol-protected bookings. However, the government chose to repatriate all.
The Air Travel Trust report notes: “This was primarily because the available spare capacity on existing services would have been insufficient to satisfy the surge in demand.”
The government has since sought to recoup some of the cost from credit and debit card acquirers.
The ATT reports that more than 600,000 consumers were affected by the failure, but “a new streamlined claims process” ensured that “around 80% of consumers had submitted [refund] claims by the end of 2017 and 80% of those claims had been fully repaid”.
Despite Monarch’s failure, the 12 months to March saw the lowest number of failures (nine) in more than 10 years.
The only other sizeable failure was that of Chadwell Travel, which traded as A1 Travel and also ceased trading in October last year.
Chadwell’s collapse cost the trust more than £4.5 million despite the company selling predominantly Flight-Plus bookings which meant most consumers held a valid airline ticket and could still travel.
Flight-Plus Atol bookings have since been scrapped by the new Package Travel Regulations which came into force on July 1.
The ATT is funded by a £2.50 Atol Protection Contribution (APC) charged on all protected bookings, with APC payments made on 25.2 million bookings in the 12-month period.
These brought in just over £63 million to the fund. However, the trust paid out £3.36 million in APC credits to Atol holders – a practice that ended this month – meaning almost £59.7 million accrued to the fund.
The fund total increased by almost £25 million year on year over the 12 months, after deducting the costs of repatriation, refunds and expenses. That compared with a rise of just £5.8 million in the year to March 2017.
The ATT is backed up by insurance worth £400 million, at a cost of just under £12 million in premiums for the year.
Air Travel Trust chairman Michael Medlicott said: “Without doubt, the insolvency of the Monarch Group was the financial year’s most significant event.”
In a letter to Secretary of State for Transport Chris Grayling accompanying the report, Medlicott noted the costs of Monarch’s insolvency “have been apportioned between the Trust and your Department”.
He told Grayling: “You will be aware that this raised important policy questions concerning the wholesale repatriation of non-Atol protected passengers.
“The Trust paid its ‘fair share’ of the cost of that operation . . . but the CAA’s expert resources, built up over years and largely funded by the Trust, have [also] been used for the benefit of non-Atol passengers.”
Referring to Grayling’s appointment of the independent Airline Insolvency Review to examine the repatriation arrangements, Medlicott told the secretary of state: “[We] trust its recommendations will lead to a more satisfactory framework.”