A leading industry lawyer has criticised the government for retreating on plans to implement new rules on airline insolvency.
The government confirmed it has “paused” plans for an Airline Insolvency Bill in a response to a Transport Select Committee report earlier this month and made clear the legislation may not be revived.
Ministers had pledged to act on airline insolvency protection following the failure of Monarch Airlines in October 2017 and set up an Airline Insolvency Review to examine the options in 2018.
More: Comment: Consumer protection against airline insolvency – delayed or cancelled?
The review reported in 2019, just months before the failure of Thomas Cook – the biggest airline insolvency in the industry’s history.
Lawyer Rhys Griffiths, partner and head of travel at law firm Fox Williams, said: “It looks highly unlikely the government will implement the recommendations of the Airline Insolvency Review in the short term or possibly at all.”
As a consequence, Griffiths said consumers making flight-only bookings “will remain unprotected if the airline fails”.
The Transport Select Committee (TSC) of MPs led by chairman Huw Merriman had urged the government to introduce an airline insolvency bill in the next session of Parliament and to set out a framework for handling airline insolvencies in a report submitted in April.
The government responded this month saying it “partially accepts” the committee’s recommendations and agreed it “should consider the recommendations of the Airline Insolvency Review” but said it would deliver only “those [recommendations] we deem appropriate”.
Although the government said it would “work to introduce” an Airline Insolvency Bill “as soon as practicable”, it would only do so “if a bill is required”.
The admission will disappoint many in the trade who have called on ministers to act on the recommendations of the Airline Insolvency Review, which proposed an all-flights levy to fund consumer financial protection against airline failure.
The government argued in its response to the TSC: “We prioritised resourcing critical response work during the pandemic, which meant [the Bill] was paused. Now we are looking towards the recovery of the aviation sector, we must ensure our solutions are fit for today’s aviation landscape.”
It pointed out it is working with the CAA on Atol reform, with a second-stage consultation due “later this year”, and “considering responses” to an Aviation Consumer Policy Reform consultation which closed in March.
This proposed giving the CAA enhanced enforcement powers against airlines which fail to comply with regulations on consumer refunds.
The government noted the committee’s recommendations on future Covid restrictions on travel, repeating a pledge that the bar for implementing any measures would be “very high” and be “proportionate to the threat” but gave no details of “the contingency toolbox of options” planned.
Merriman dismissed the response as “disappointing” and “a missed opportunity”, saying: “It will not offer any comfort for travellers.”
The government published its promised Aviation Passenger Charter on July 17, outlining “what passengers can reasonably expect from airlines, travel agents, tour operators and airports, and what do if flights are cancelled or delayed, or baggage goes missing”.
More: Comment: Consumer protection against airline insolvency – delayed or cancelled?