APPENDIX 2
Memorandum submitted by the Air Transport
Users Council (AUC)
1. The AUC congratulates the Transport Committee
on following up the collapse of EUjet with a further hearing on
the lack of financial protection for passengers in such circumstances.
The background to the issue of financial protection in the event
of airline failure is comprehensively covered in the Committee's
July 2004 report. This Memorandum seeks to give the Committee
a flavour of the AUC's first-hand experience of advising passengers
affected by airline failures. Too often, the only advice it can
give to a passenger is that they have lost their money.
2. In the case of EUjet, the AUC dealt with
172 telephone calls from passengers affected by the collapse.
The majority of these calls (132) came in the first two days when
many callers were still trying to establish what the collapse
meant for them.
3. At least eighteen of the calls to the
AUC were from passengers stranded overseas. The remainder were
from people who had not yet travelled and were facing the prospect
of having lost their money. Many callers were not covered by their
travel insurance (others had not thought to check their policies
or had not taken out insurance). Some had used debit cards (often
to avoid credit card charges levied by EUJet). And some passengers
who had used credit cards said that the card issuer was refusing
to reimburse them their losses (we believe this may have been
due to a recent court ruling that the Consumer Credit Act did
not apply to purchases overseas—and EUjet's website was
hosted in Ireland). The largest single loss reported to the AUC
was around £1,400.
4. The AUC is aware that a number of other
airlines offered reduced price tickets to EUjet passengers stranded
overseas. But it does not see this as a viable "voluntary"
alternative to the statutory protection advocated by the Transport
Committee, for the following reasons:
— difficulties in letting stranded
passengers know about the offers;
— the offers to EUjet passengers were
for a limited period (one week);
— it was fortunate that most EUjet
routes were on popular leisure destinations that were well-served
by other carriers (though none, of course, was able to fly stranded
passengers back to Manston);
— EUjet was a small carrier: if a larger
carrier were to collapse, other carriers may not have enough spare
capacity to help out;
— the reduced price tickets for stranded
passengers were of no comfort to passengers yet to fly and who
simply lost their money.
5. This is not an issue that is going to
go away. Air travellers are increasingly comfortable with the
idea of do-it-yourself holiday arrangements that are, by definition,
not protected under the Package Travel Regulations. The liberalised
EU internal market in air transport encourages new airlines to
start up (and many of them are choosing to serve the UK market).
And some will fail.
6. Outside the EU, the gradual liberalisation
of international services can be expected to exacerbate the problem.
Private sector long haul carriers will be operating to lower margins
than has historically been the case for state-owned carriers in
markets where access has been restricted by bilateral air services
agreement. And without the prop of state funding, some of them
too will fail.
7. In conclusion, the AUC shares the Committee's
concern about the continuing absence of statutory protection for
air passengers in the event of financial failure of an airline.
The Government should accept the Committee's recommendations and
give high priority to bringing forward proposals for legislation
for a scheme covering all travel by air.
16 September 2005
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