Sunday, 27 June 2010

Flight levy to bail out ash victims?

The Government is considering whether an emergency fund can be set up to cover the hotel bills and other unavoidable expenses of passengers delayed by future ash clouds or other natural disasters.

The money would be raised through a levy on passengers. Ministers have noted that a mechanism for this already exists as part of the ATOL (air travel organiser's licence) system, which ensures holidaymakers are not left out of pocket or stranded abroad when package tour operators go bust, and are understood to have floated the suggestion that this scheme could be widened. But the major trade organisation, ABTA (Association of British Travel Agents) will argue strongly that any new fund should be kept separate.

In either event is is inevitable that such a move would encompass passengers buying scheduled flights independently - they are not covered by the ATOL umbrella - requiring them to pay a similar levy to that already paid by package holiday customers.

A rethink of current consumer protection has been prompted by the inadequacy of existing schemes to deal with the volcanic eruption. Airlines were compelled by EU rules to foot hotel bills of passengers grounded by the ash. But they have complained, with some justification, that those rules were designed to help passengers who are bumped off flights after overbooking or hit by cancellations, and were never intended to cover the huge cost of a crisis which delayed thousands of passengers for several days or even weeks.

British tour firms have called on the Government to reimburse the expenses they incurred looking after delayed customers. ABTA alone is seeking £80 million in compensation for its members. It would rather see a Europe wide scheme to guard against potential repeats. But European legislation is always a slow process – and tour operators themselves recognise that the likelihood of the Treasury refunding all or part of their unforeseen costs against a background of severe cuts in public spending is remote in the extreme.

The ash crisis occurred just as the previous Government and the industry were thrashing out a badly needed reform of the present ATOL scheme, raising the question whether the fund could be extended simultaneously. Some travel industry leaders are concerned that bundling up a new levy with the existing scheme might delay that reform already in the pipeline, which aims to clarify the definition of a package holiday.

Even if Britain took action independently of Brussels the changes could not be made overnight. They would require primary legislation at a time when the coalition's timetable is chock full. And there could be resistance from major scheduled airlines. ABTA is among those in the travel business to have pushed for the inclusion of passengers buying scheduled air tickets in the present ATOL protection scheme. It says that is the only way to simplify a system, designed to reimburse and repatriate customers booking conventional packages from brochures, which has been overtaken by so called “dynamic packaging” - the piecing together of separate holiday elements via the internet. But British Airways, for example, argues its passengers should not pay a levy to bail out people booking with weaker airlines which may be more vulnerable to financial failure.

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