A renewed call for the Atol bonding scheme to be scrapped and replaced by using “exorbitant” Air Passenger Duty to protect customers from airline failures comes today.
Multicom managing director today John Howell repeated a plea for APD to fund passenger protection.
His comments come after the Air Travel Insolvency Protection Advisory Committee highlighted an avoidance loophole in the proposed changes to the European Package Travel Directive in their response to the consultation on the scheme.
As currently drafted, the European PTD proposals would not be able to prevent companies from relocating outside the European Economic Area to avoid the planned legislative changes.
However, it is not expected that the changes will be implemented by EU member states for at least another two years.
But Howell believes there is a far easier solution to the problem that also addresses other anomalies in the current system.
A long time campaigner and critic of the government’s stance on APD, he reiterated Howell calls for APD to be used to fund compensation for passengers if their airline goes bust.
Howell said: “As currently drafted the European Package Travel Directive is fundamentally flawed if companies follow Lowcostholidays’ initiative and relocate outside of the EEA.
“It will also be a useless directive in a global market where more and more businesses located outside the EU are looking to grow their share of package holiday sales in the UK and other European markets.
“Additionally, the current Atol regulations are bad for business and are unfair due the imbalance of costs between airlines and agents.
“However, we already have a system in APD that generates millions each year for the government and that money should be ring fenced to underwrite the costs via the Civil Aviation Authority when an airline fails.
“It makes sense, flight only and package bookings are covered by APD which is in reality a holiday tax and that would allow action to be taken quicker and ensure that the airlines are the ones that pay as they are the ones that go bust.
“In one simple move the whole complicated system and flawed directives could be removed and replaced by a simple and workable solution that already exists.
“That surely has to be a better solution than what is currently proposed in the PTD?”