The future of aviation - Transport Committee Contents


7  Passenger representation and protection

Passenger representation

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.[162] 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 fees—ultimately 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.[163] 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.[164]

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.[165]

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.

Passenger protection

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.[166] However, those online customers who, increasingly, book flight-only or what may appear to be a package,[167] 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.[168]

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 airline bankruptcy.[169] 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.[170] 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 cash injection.[171]

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 holidays.

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

163   Passengers on Transport for London services are represented by London Travel Watch.  Back

164   Eighth Report of Session 2006-07, Passengers' Experience of Air Travel, HC 435, p 44 Back

165   Q 354 Back

166   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

167   Q 353 Back

168   Ev 250 Back

169   Second Report of Session 2005-06, Financial Protection for Air Travellers: Abandoning Effective Protection, HC 636, para 37 Back

170   Ev 250 Back

171   Ev 405 Back


 
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