The levy to protect package holiday customers from losing money or being left stranded abroad when tour operators go broke should increase from £1 to £3 per passenger, the Civil Aviation Authority proposed today.
In a consultation paper sent to the travel industry it blames last summer's collapse of airline and tour firm XL and the likely downturn in travel.
The XL crash devastated the fund which the levy was designed to establish - and which had only just begun to be built up. Reluctance to travel, partly because of the weak £, looks likely to reduce the amount of cash coming in at a time when the recession threatens to push more tour firms out of business.
The CAA anticipates a decision on the increase from Transport Secretary Geoff Hoon by summer. If it gets the go ahead it will increase the levy from October 1.
The levy is used under the ATOL system to ensure passengers are not left out of pocket and to pay for their repatriation.
The Authority and the Government are also reviewing the still unresolved issue of what exactly should be covered by the ATOL scheme. It is looking at the possibility of exending cover to any flight sold with some other travel do not form part of a pre-arranged package. It may also bring bring into the net holidays by surface transport - such as those including ferry travel.
But one problem is that some changes may need primary legislation. It is hard to see Government making passenger protection a priority with the country still deep in recession and a General Election looming unless there are votes in it.
And the whole vexed issue of consumer protection for leisure travels remains so labyrinthine that it is unlike to make the most compelling of campaign material.