Comment: Consumer protection against airline insolvency – delayed or cancelled?

The government has indicated that its enthusiasm for introducing consumer protection for airline failure has waned significantly.

It now looks doubtful that the recommendations of the 2019 Airline Insolvency Review will be implemented in the short term or at all.

There have long been calls to introduce consumer protection against the risk of airline failure.

These grew louder following the failures of Monarch Airlines and Thomas Cook, which necessitated the government undertaking a huge repatriation effort at taxpayers’ expense.

At the time, the government indicated its desire to see the risk of airline insolvency sit with the industry and not the taxpayer.

It therefore commissioned an independent Airline Insolvency Review, which recommended:

• A new Flight Protection Scheme, which would protect passengers while abroad if an airline became insolvent at an estimated average cost of less than 50p per passenger;
• Reforming the UK’s airline insolvency regime so an airline’s own aircraft could be used to repatriate passengers should it fail;
• Providing the CAA with the powers and capability to coordinate repatriation for all sizes of airline; and
• Improving awareness and take up of safeguards that protect future bookings when airlines collapse.

The government announced in 2019 that it would introduce new laws to implement these recommendations, but then the pandemic struck and the new laws did not materialise.

On April 25 2022, the Commons transport select committee reminded the government of its earlier commitment and recommended it now introduce legislation to implement the recommendations of the Airline Insolvency Review.

On July 11, the government published its response to the committee, which signalled a cooling of its desire to implement the recommendations of the review.

The government now says it will only “consider” the recommendations and “deliver on those we deem appropriate”.

There is no commitment as to whether any specific aspect of the Airline Insolvency Review will be implemented, and no indication what the process will be for choosing which aspects to implement or the timetable for doing so.

It now looks highly unlikely the government will implement the recommendations of the Airline Insolvency Review in the short term or possibly at all.

That means consumers who make flight-only bookings will remain unprotected by an insolvency scheme if the airline fails and the prospect of the taxpayer having to fund another huge repatriation remains.