Tuesday, 14 October 2008

Air passenger protection - time to catch the wind of change

Airlines continue to face severe difficulties. Even though oil prices have dropped the advantages are being offset by the weakness of sterling against the US dollar and the looming downturn in major world economies.

In the past I have advised readers to pay by credit card or to seek out scheduled airline failure insurance - SAFI as it is known in the travel business - which ensures you get your money back if a carier goes bust. That remains my advice.

But travellers do not always pay by credit card. And it is ever clearer that SAFI, which is at best a double edged sword, is not a satisfactory long term solution, either.

Just as banks are now likely - whatever the Government decrees - to become more cautious about lending to those they regards as in any way risky, providers of such insurance are unlikely to offer it to passengers booking with potentially shaky airlines.

The withdrawal of cover can clearly exacerbate problems for the airline involved, possibly even driving it under when there might have been a chance of bailing it out. The travel industry grapevine is such that news of a withdrawal spreads rapidly. And while travel agents may be cautious of steering customers away from the relevant airline, they are certainly less likely to recommend it.

So we go back with the need to include scheduled airlines in the protection system already afforded to package holidaymakers. The recent XL impressed on the Government the complications which arise when a company carries both protected and unprotected passengers.

Othe companies may step in to help with the rescue of customers already abroad, as firms such as Thomas Cook, TUI and First Choice did after XL capsized. But they do not want to subject their reps in resorts and at airports to the risk of verbal - or perhaps physical - assault by angry unprotected passengers who feel they are being treated as second class citizens.

This would be less of a headache if most of those unprotected understood and accepted the risks they were taking, but research has shown that a huge proportion do not.

The two class system has to go. The notion that in an age of unfettered competition, scheduled passengers should sort out their own protection, is surely discredited.

The astonishing results of the banking crisis suggest that the wind has veered against the untempered free market. Governments have been forced to think what was, only months ago, unthinkable. The US administration has introduced measures which would have been seen in much of that country as extreme socialism.

By extension, political minds may by more persuadable. Ensuring scheduled airline passengers are not left stranded or out of pocket may be a minor consideration against the backdrop of global financial meltdown. But if not now, when?

1 comment:

JHarris said...

Insurance remains the best form of protection for consumers and if certain insurers no longer cover an airline is that not a fair warning to the consumer not to travel with that airline rather than be stranded abroad without any warning under the CAA ATOL scheme. Consumers had to wait weeks for a return flight under the CAA protection.

In light of the XL collapse consumers stranded abroad without ATOL protection relying on their credit card in the main were not covered because credit cards do not cover repatriation. There were a few cases of consumers getting something from their credit card but it was only half the original ticket cost. These consumers faced a single one way return fare which is always more than a return fare plus the fact there were no low cost fares home so flights were 3-4 times their original return fare.

SAFI covers repatriation and upto a limit allowing consumers to book a higher return fare.