On the 9th May 2019 the Department for Transport published its wide-ranging and well researched Airline Insolvency Review (”AIR”) with contains many sensible but challenging proposals.

The full text can be found at https://www.gov.uk/government/publications/airline-insolvency-review-final-report.

Briefly, AIR proposes a privately funded Flight Protection Scheme, under which the beneficiary (the passenger) pays for protection, together with a new Special Administration Regime (“SAR”) for insolvent airlines in order to facilitate the Scheme.

A Scheme levy estimated at 50p per passenger seat will in time produce a fund to enable the repatriation of stranded passengers by the insolvent airline at no cost to the taxpayer.

Other existing remedies including the Air Travel Organisers Licence (“ATOL”), holiday insurance and Consumer Credit Act payment protection will be harmonised as required to contribute to the losses suffered by travellers on future bookings and holidays which have commenced.

In the event of any airline insolvency the first major issue to be resolved is the immediate availability money to cover the extensive repatriation costs involving numerous stakeholders but to be effective there has to be the second, and potentially more complex, SAR to keep the failed airline operating to complete the repatriation of its passengers.

In this brief note it is not possible to summarise the funding and operational difficulties outlined in the 109-page Review, but it will be some considerable time before all the practical and legal solutions are in place. Even then the proof of any new routine can only be fully assessed on implementation which needs another airline operator insolvency, which is the only certainty at present.

Whether the Flight Protection Scheme comes into effect before the next airline failure is in considerable doubt therefore passengers should opt for all the available airline failure protection currently available through ATOL, holiday insurance and payments under the Consumer Credit Act.

Belief in “it can’t happen to me” is both high risk and potentially much more expensive!

Tony Armitage