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Money hits the fan after huge British airline collapse

October 6, 2017 Headline News No Comments Email Email

Travel consumers are generally well protected in Britain but in the wake of the biggest airline financial collapse ever recorded in that country, there are signs that the protection may be beginning to unravel.

The country’s largest peacetime repatriation is taking place following the financial failure of Monarch Airlines last weekend, with 110,000 passengers stranded and hundreds of thousands of future bookings cancelled. See: Huge collapse requires rescue of 110,000 travellers

The repatriation reportedly is costing GBP 65 million (AUD 110 million) and the total may blow out further. Tour operators and travel agents claim they are being treated unfairly, compared with airlines.

Since 1973, by law, every UK travel company which sells air holidays and flights is required to hold a government-issued Air Travel Organiser’s Licence (ATOL). If a travel company with an ATOL ceases trading, the ATOL scheme protects customers who had booked holidays with the firm. It ensures they do not get stranded abroad or lose money.

Monarch A321 takes off from UK airport before the great collapse

Britain’s travel industry is increasingly uneasy and indignant, however, at demands from the British authorities that tour operators and travel agents who booked passengers on Monarch flights must pay GBP 250 (AUD 423) per head to bring their clients back home.

For a start, some say that’s far too much. Some in the travel industry criticise the official decision to use Qatar Airways aircraft to rescue stranded travellers. Others say that as the government is prepared to repatriate for free all Monarch customers without ATOL protection, what’s the point of ATOL in the first place?

“While it’s very impressive that the Government has mounted such an extensive operation to repatriate all 110,000 of Monarch’s customers who were overseas when the airline went down, it is also an extremely expensive way to work,” Britain’s Association of Independent Tour Operators (AITO) commented.

Customers meanwhile, report that the price of booking with rival airlines such as Ryanair, British Airways, Jet2 and Norwegian has jumped since Monarch’s collapse.

Britain’s Civil Aviation Authority (CAA) administers ATOL. The question and answer section on the CAA website gives an idea of the confusion involved.

I bought my travel outside the UK, am I ATOL protected?

ATOL is a financial protection scheme for consumers buying air travel in the UK. Unfortunately, if your flight or holiday started outside the UK, you are not entitled to make a claim for a refund from the CAA. We would advise you to contact your insurer or card issuer for advice. If you need to book a new flight, there is information on alternative airlines available.

I booked a Monarch flight as my return journey, alongside another flight provided by another airline. Am I protected?

If you are due to return to the UK on or before 15 October 2017, we will be arranging a new flight for you. If you are due to travel on or after 16 October 2017, you will need to book your own flight back to the UK. If you booked your flights through another travel company, please contact them for advice or speak to your insurer or card issuer. If you need to book a new flight, please see the information on alternative airlines that are available.

I booked a hotel only with Monarch, am I ATOL protected?

ATOL protection only applies to hotels when booked as part of a package holiday or if it was bought at the same time or within a day of a flight as part of a Flight-Plus arrangement. Consequently, if you bought a hotel only, this will not be ATOL protected. You should contact your card issuer, or travel insurer for advice on whether you can claim a refund.

And so on…

Meanwhile AITO, an alliance of specialist holiday companies established 42 years ago, says that of the 110,000 passengers currently abroad courtesy of Monarch, “just 20,000 were covered by the ATOL system.  That means that 90,000 people booked their flights outside any protection scheme, clearly demonstrating how out of touch legislation is with the current-day travel industry.”

AITO says probably 65 out of its 120 specialist operators have been affected by the Monarch collapse “to a greater or lesser degree – but it’s important to remember that all AITO clients affected will be fully looked after by AITO members, at no extra cost to their customers.

“Many AITO clients currently abroad have already received revised flight details – either from their AITO tour operator or their AITO Specialist Travel Agent – and are happily continuing to enjoy their holiday, with no unnecessary concerns at all.”

“What is required”, says Derek Moore, AITO’s chairman, “is significantly better planning – and a better understanding of the travel industry, too.

“Did the Government liaise with any of the trade bodies which could have advised it on this matter?  Or did it simply dive in and sign a cheque for GBP 65 million, which the taxpayer, the travel industry and the credit card suppliers will be expected to foot?”

Moore says the basic precept not grasped by government is that airlines will fail. “It’s a risky business in many ways.”

He continues: “Government harbours the false belief, supported by strong airline lobbying, that airlines won’t go bust – despite the evidence in plain view.  Just think about XL, Swissair, Air Berlin, Alitalia… there is a long history of failed airlines, in Europe and the wider world, and airlines are much more likely to fail than tour operators.

Australians would add Ansett to that list.

“Yet,” says Moore, “Government has done nothing to protect passengers booking scheduled airline seats, as with Monarch, while tying tour operators up in unnecessary red tape (the ATOL system) that they have now apparently chosen to override and ignore.

“It’s a very uneven playing field – airlines and tour operators are treated in a totally different manner – and we in the industry are rightly annoyed that the Government has ridden roughshod over us to repatriate people whom it failed to protect via scheduled airline legislation, as was suggested 12 years ago.”

Written by Peter Needham



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