139. Air passengers with a complaint against an airline
or airport may currently seek the assistance of the Air Transport
Users Council (AUC). The AUC was set up by the CAA in 1973, but
has no statutory basis. Its remit was to assist the CAA in its
duties to further the reasonable interests of air transport services.
140. In its 2009 consultation document on reforming
the economic regulation of airports, the Government has proposed
the establishment of a statutory body to represent air passengers.
This would involve transferring the responsibility for complaints
handling from the AUC to Passenger Focus and giving Passenger
Focus a greater policy advocacy role on behalf of the air passenger.
Its air passenger role would be funded through airport licence
feesultimately a charge on air passenger. Passenger Focus
is a statutory body with responsibility for rail passengers and,
from 2010, for bus and coach passengers outside London.
It is funded by the Department for Transport.
141. In our Report Passengers' Experience of Air
Travel we called for stronger passenger representation and
made the following recommendation pertaining to the AUC:
The Air Transport Users' Council does a fine job
with limited resources and what appears to be no advertising budget.
We recommend that the CAA look at devising some kind of cross-subsidy
for the Council from airport and airline fines for poor performance
and that the Council does more to advertise itself.
Witnesses to our current inquiry expressed no dissatisfaction
with the AUC.
142. The Government's proposal raises interesting
questions about the most appropriate and effective model of passenger
representation. The AUC investigates cases of detriment brought
by individual air passengers, applying the consumer protection
legislation and codes, most of which now apply across the EU.
The Chief Executive of AUC, Simon Evans, told us that, in his
view, consumer protection legislation was now well established
and that passengers were best served by effective application
of the laws. Mr Josephides, Director of the Independent Tour Operators
Association, endorsed this approach.
143. Passenger Focus also has a role in resolving
disputes between individual passengers and transport operators
but its emphasis is on advocacy backed by research. It seeks to
further the interests of passengers through reports, lobbying
and campaigns. It has undertaken research for the Department for
Transport which may adopt its recommendations. The Chief Executive
of Passenger Focus, Anthony Smith, told us that Passenger Focus
would be able to bring its research skills to bear on the air
travel sector and it would be able to represent the passenger
for more of their journey, across the modes. However, Passenger
Focus' remit does not cover travel by London Underground, London
buses, taxis or by car.
144. We welcome moves to strengthen the voice of
air passengers and the increased emphasis on the passenger in
the remit for the CAA. In reaching its conclusion, the Government
should consider that the issues facing air passengers and those
faced by bus or rail passengers are often quite different. For
many people, air travel is an infrequent, discretionary journey,
whereas bus and rail travellers have little choice about many
of their journeys. Air passengers tend to experience greater competition
and choice than do bus or rail passengers. Air travel is a private
contract between the passenger and the operator, whereas the public
authorities (central or local Government or other public agencies)
are frequently involved in specifying or subsidising bus and rail
travel, for example, through the specification of rail franchises
or funding concessionary bus travel.
145. We welcome
moves to strengthen the voice of air passengers and the increased
emphasis on the passenger in the remit for the CAA.
It is not clear how the Government's
proposal to replace the Air Transport Users Council with Passenger
Focus would influence the airlines or airports. This is true despite
the proposal to beef up the passenger advocacy role of Passenger
Focus, as compared to AUC's current remit. No new powers are proposed.
Government influence over bus and rail companies, for example
through the specification of rail franchises, does not extend
to the aviation sector which is heavily prescribed by international
legislation. The air travel market is highly competitive and operators
take a hard-nosed approach to service costs and standards. Whatever
the Government decides regarding passenger representation, it
is essential that the powers of a body defending passengers' rights
match its remit. If not, it may create false expectations.
146. We have previously inquired into the financial
protection for passengers in the event of an airline abruptly
ceasing to operate. Passengers who book a flight which is part
of a package pay a small, mandatory levy and are insured under
the ATOL scheme.
However, those online customers who, increasingly, book flight-only
or what may appear to be a package,
are not protected unless they take out their own travel insurance.
Those who pay with a credit card may be able to recover costs
from the credit card company. It is doubtful if all passengers
understand this complicated and anachronistic situation.
147. ABTA described the situation for us:
Passengers travelling on flights which are part of
packages sold under the Package Travel Regulations are protected
against the insolvency of the air carrier through the Civil Aviation
Authority's ATOL Regulations. Another passenger travelling on
the same flight who purchased their ticket direct from an airline,
or through its agent, is not protected unless he has taken out
insurance. There must be consistency so that the passenger is
assured that, when he is buying a flight/holiday from whatever
source, he is protected.
148. Recent industry failures have left passengers
stranded at foreign airports. The collapse of XL Leisure Group
in September 2008 followed the failure of the low-cost transatlantic
airline, Zoom. Italian airline Alitalia narrowly avoided liquidation
in the same year and British Airways has been suffering unprecedented
financial difficulties. SkyEurope filed for bankruptcy in August
2009 and ceased to operate all fights. When we considered this
issue in 2006, we recommended that the Government should support
the CAA's then position to impose a "modest mandatory levy"
on tickets to guard against the consequences to passengers of
However, the Government decided against this policy.
149. All our witnesses said that passenger protection
was inadequate. The situation could deteriorate further if tour
operators decide to 'unbundle' their packages in order to compete
with others who are not required to include the ATOL levy in their
charge to the passenger.
Furthermore, the Government, as the ultimate insurer of the ATOL
scheme, carries much of the financial risk. The CAA has proposed
an increase from £1 to £3 in the ATOL levy. easyJet
recommended a different approach to passenger protection:
The focus of previous efforts have been on measures
to apply following failure, and are not pre-emptive. [
Our proposal is that the Government should require all UK based
airlines to have cash to cover three months of operations, without
this they would be unable to sell seats on future flights. This
would allow airlines to either fail slowly, with their aircraft
and crew used to complete flights, or to be rescued through a
150. The Government has undertaken a 'lessons learned'
exercise following the collapse of XL Leisure. It has sought to
improve information to passengers regarding their rights and the
need for travel insurance for non-ABTA flights. However, it is
not clear that standard travel insurance usually excludes economic
failure by the airline. We
remain concerned that air passengers are not adequately protected
from airline collapse. As the number of people who book flights
over the internet increases, the number at risk also rises. We
repeat our recommendation that the ATOL levy should be increased
and extended to include all flights overseas and not merely package
151. We also
urge the Government to work with the insurance industry to make
it clear to passengers that standard travel insurance does not
normally include flights home in the case of economic collapse
by the airline.
162 Department for Transport, Reforming the framework
for the economic regulation of the UK airports, March 2009,
p 128 Back
Passengers on Transport for London services are represented by
London Travel Watch. Back
Eighth Report of Session 2006-07, Passengers' Experience of
Air Travel, HC 435, p 44 Back
Q 354 Back
The Air Travel Organisers' Licensing (ATOL) carries out checks
on the tour operators and travel organisers it licenses, and requiring
them to take part in a financial guarantee scheme managed by the
Air Travel Trust (ATT) which provides the funds to protect customers
should a firm fail. Back
Q 353 Back
Ev 250 Back
Second Report of Session 2005-06, Financial Protection for
Air Travellers: Abandoning Effective Protection, HC 636, para
Ev 250 Back
Ev 405 Back