New ATOL Bill – Will this be affected by the collapse of Monarch ?

The new ATOL bill is passing through Parliament at a rate of knots. The committee stage, report stage and third reading were all due to take place in July 2017 and if the pace continues it will become law quickly. Following this the real business of amending the ATOL regulations 2012 should take place. The recent, well publicised, collapse of Monarch Airlines highlighted the long debated thorny travel industry issue of the Airline industry not covered under the ATOL scheme. Airlines selling flight only are not included in the ATOL Protection contribution of £2.50 per passenger which is collected and paid into the Air Travel Trust Fund. The fund is there to be called upon to financially protect consumers in the event of a travel companies failure.

The Government’s recent decision to repatriate Monarch airline passengers, regardless of whether or not they were protected by the ATOL scheme, highlights the flaws in the current regime. The ATOL scheme is designed to ensure that consumers who buy package holidays will be repatriated or refunded at no extra cost to the organiser if the holiday fails. However, ATOL doesn’t cover protection from airlines or through aggregator sites. In the case of Monarch, this was the vast majority of passengers who were stuck overseas and had to be brought home by the Government.

The bill is reportedly £60 million to repatriate 110,000 Monarch customers, that and the backlash from the rest of the travel trade for bringing home non-ATOL protected customers must surely require legislative change. Until the CAA financials are published we will not know whether the cost of this repatriation came from the Air travel Trust Fund. Low cost carrier Air Berlin failed in August 2017, but in accordance with German law it continued to fly after it filed for insolvency. If that option had been available to Monarch the knock on effect to travellers, the trade and the Government would have been substantially less. The continuing to operate whilst in administration is not possible under UK insolvency law.

Transport secretary, Chris Grayling, gave a statement on the collapse to the House of Commons and suggested in future that airlines be allowed to “wind down in an orderly manner” instead of ceasing operations.

Administrators KPMG is seeking legal opinion as to whether it is able to sell the take-off and landing slots at Gatwick, Manchester, Birmingham and Leeds/Bradford. The average 15 daily slots at congested Gatwick are said to be worth tens of millions. Greybull, the owners of Monarch, have indicated that any monies raised will be used to reimburse Government, rather than settle their legal charges.

With this large failure, Government intervention and industry backlash it would be a surprise if there was no legislative change, either in the area of Insolvency or in the ATOL scheme, in response.

  • Hi Nicola - amazing that as a taxpayer I have shared in funding the £60m required to repatriate the Monarch customers although there was no obligation on the Government to take this approach! The Boston Tea Party was staged on the basis on "no taxation, no representation" if I recall. Plus ca change! Ian