Saturday, 13 September 2008

XL - will the Government please now act to protect scheduled passengers?

After the demise of XL, will the Government reconsider its decision not to extend the £1 finanancial protection levy to passengers booking scheduled airline flights? Don't hold your breath.

When the post mortem is complete the records will show that many XL passengers lost money not just because they had to fork out extra for replacement flights home but because those still due to travel on the airline were in unprotected by the ATOL (air travel organiser's licence) scheme which covers package holidaymakers.

So while the latter, while their holiday plans will be disrupted, will get their money back while the latter - unless they paid by credit card - will be left out of pocket.

The Government should ignore the objections of major airlines which argue that their customers should not have to effectly subsidise travellers who book with weaker, competing carriers.

How many times must it be demonstrated to Ministers that consumers do not understand a protection scheme which does not cover all travellers. Surely, with the prospect that more travel operators will go under before the current economic storm blows over, they finally accept that action needs to be taken.

Meanwhile the European Commission is understood to be looking again at the possibility of an EU wide protection scheme. It cannot come soon enough.

Finally, a thought on the way the XL affair was handled. It is naive to suggest that, because bankers and the Civil Aviation Authority were aware that company was in trouble some time before it went into administration, they should have pulled the plug in August, say, rather than September.

If XL had capsized a month earlier, at the peak of the school summer holidays, even more holidaymakers - many of them families - would have been hit Repatriation of those already abroad would have been more difficult with less spare aircraft capacity and the cost of the bail out would have been signiciantly higher.

Since Court Line, then the UK's biggest tour firm, collapsed in August 1974, remarkably few package tour operators - or their associated airlines - have failed in the summer peak. That should stand as a tribute to the expertise of those who monitor the health of the industry.

Nor is there much point complaining that XL was taking bookings until the last moment before it collapsed. Not at least unless it can be shown that its directors knew, earlier and unquestionably, that there was no hope of saving the company. In that case, issue of moral responsibility would arise. However, if here was any hope, to have stopped accepting new business would have been corporate suicide

This is not to deny sympathy to passengers who have suffered. Rather it is to point out that if they had been spared disruption and financial loss, others would have suffered - whenever the plug had been pulled.

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