The collapse of the Globespan group will strengthen claims that the suggested shake up of traveller protection just put out for consultation by the Department for Transport does not go far enough.
Part of the Scottish group's operations was the airline Flyglobespan, which is thought to have some 3400 passengers abroad in Spain (including the Balearics and Canaries), Portugal, Cyprus and Egypt.and another 90,000 with forward bookings.
While the group's package holiday customers will be repatriated if necessary - and get refunds if they have yet to travel - under the Civil Aviation Authority's ATOL scheme, customers buying only flights may not be so lucky. Those abroad will need to make their own way home, perhaps paying special fares offered by other carriers. Those still to fly should be able to get their money back if they paid by credit card - provided the payment was over £100 - or by some debits cards. Some may have airline insolvency cover in their travel insurance. But many will undoubtedly be left out of pocket.
The Department's consultation document does not suggest extending the ATOL scheme to scheduled airline passengers. It says: "The Government decided against this in 2005 and still believes it would be disproportionate regulation. It might distort competition with foreign airlines and be open to challenge under European law, unless achieved through European legislation. Many airline 'flight only' sales are low cost - but if passengers know their money is unprotected against airline insolvency they can choose to bear the risk or seek protection from a credit card or insurance policy."
There was an immediate demand today that the Government should rethink its position. The trade association ABTA said it had "repeatedly raised the issue of this double standard of financial protection and recommended that airlines be required to offer the same level of financial protection as package tour operators."
This would ensure airline customers would be provided with flights home free of charge or refunds for future bookings if an airline collapsed. ABTA urged both the Department and the European Commission, which is looking into the lack of financial protection for scheduled passengers, to take urgent action.
Mark Tanzer, chief executive said "Once more a bankrupt airline has left customers stranded abroad and out of pocket. The Government must take action so that airline customers are no longer treated as second class citizens and have the same level of protection that tour operators have provided to their customers for over 30 years"