7 CONCLUSION
71. We believe that the Government has taken the
wrong decision to reject the CAA's case for the levy to finance
the return journeys of passengers stranded by the collapse of
their air carrier and to provide refunds.
72. An opportunity to improve consumer protection
has been lost. The present arrangement in which ATOL passengers
have protection and others do not is plainly unfair. We believe
that as the market covered by ATOL shrinks, and the number of
unprotected passengers grows, the present arrangements will become
increasingly untenable. The Government's decision however means
that the present inadequate arrangements will be prolonged.
73. The Government has ignored the CAA, the industry
regulator, which has produced a well argued and robust case for
a levy on all flights originating from the UK. Worse, there is
no evidence of sound, or indeed any serious analysis underpinning
the Government's decision. The quality of the written evidence
submitted by the Government to this inquiry was strong on assertion
but weak on substance, and the Minister proved unpersuasive at
our hearing.
74. Meanwhile, the Government is spending time
embedding voluntary arrangements for repatriation which do not
guarantee the stranded passenger a flight home and which are bound
to be structurally fragile. This is an amateurish approach.
75. The Government has asked the CAA to examine
whether tour operators' obligations under the Package Travel Directive
could be fulfilled by moving away from ATOL bonds to a system
that avoided tying up capital and creating barrier to market entry.[130]
While this is welcome evidence that the Government recognises
the practical difficulties for tour operators of the ATOL arrangements,
it will do nothing to ease the problems of protection for the
growing numbers of travellers whose arrangements are made independently.
76. The Government has said in response to our
predecessors' report that the European Package Travel Directive
is in the "early stages" of review by the Commission,
and that there may be a legislative proposal in 2006.[131]
This hardly amounts to a firm promise of early action by the Commission
or enhanced protection for travellers in the mean time. The Government
has provided us with no further details about what European legislative
proposals might emerge, so we can make no assumptions about whether
these are likely to enhance air passenger protection or not. These
are not sound grounds for delaying effective action now at a national
level. Demonstrably successful UK policies might also contribute
positively to wider European policy development. Instead, the
Government appears content to wait passively on what has been
glacial progress to date on this matter in Europe.[132]
Meanwhile, millions of UK air travellers continue to fly unprotected
against carrier collapse.
77. Unless the Government takes the steps recommended
in our predecessor's report, and the advice provided to it by
the CAA, the reality is that the number of UK international leisure
air travellers in receipt of adequate financial protection will
continue to fall steeply. This is unacceptable. The Government's
decision not to implement the CAA's advice amounts to allowing
the present policy of protection, on which ATOL is based, to wither
on the vine. The day of 'bond based' protection like ATOL is passing;
modernisation is required. Given the very large numbers of air
travellers and the continuing fragility of air carriers, however,
the underlying rationale for protecting passengers against airline
insolvency embodied by ATOL remains sound. The Government must
take the opportunity afforded by this report to reconsider its
decision.
130 Ev 4 Back
131
Transport Select Committee, Financial Protection for Air Travellers:
Government and Civil Aviation Authority Responses to the 15th
Report of Session 2003-04, Seventh Special Report of Session 2005-06,
HC 639, p 1. Three years ago, the European Commission's survey
revealed that "Consumer organisations think that this issue
should be urgently addressed", Summary of Responses to Airlines'
Contracts With Passengers, 6 February 2003, http://europa.eu.int/comm./transport/air/rights/doc_consult_contracts/summary_consultation_paper_en.pdf Back
132
Financial Protection for Air Travellers, paras 49, 50 Back
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