The Government has decided not to accept the Civil Aviation Authority's recommendation for a £1 levy on all air passengers departing the UK. The levy was intended to finance the homeward journeys of passengers whose airline went bankrupt while they were abroad, and refunds of the money they had lost.
The announcement was made today by Aviation Minister Karen Buck in a Written Statement to Parliament.
Commenting, Ms Buck said:
"The recommendation has its merits, but after considering all the arguments we have decided that these attractions are outweighed by the disadvantages.
"We believe that people should be free to choose whether to pay for insurance or not. It is not compulsory, for example, to take out medical insurance or an E111 European health form; and the Government doesn't force householders to insure their house contents, although most of us think it's wise to do so. Even in car insurance, the legal requirement is limited to third party liabilities.
"While information about insurance cover is already available from the Civil Aviation Authority, Air Transport Users Council and Foreign & Commonwealth Office, we are working with the airline industry to help passengers learn more about air travel insurance. UK airlines have helped us develop a basic message for passengers making online bookings, and some intend to offer specific insurance as well as posting a message.
"When the Irish airline EU Jet failed this summer, several UK airlines stepped in to help passengers get home. The same happened when Sabena and Swissair failed in 2001. The Government is talking to airlines to ensure the maximum effectiveness of voluntary rescue efforts in future.
"We have also asked the CAA to see whether the system of ATOL bonds could be replaced with a less bureaucratic way of meeting tour operators' obligations to package holiday-makers under European law."
Notes to editors
European legislation on Package Travel requires travel organisers to provide evidence of security for the refund of money paid over and for the repatriation of the consumer in the event of insolvency of the tour operating company. In the UK, this is implemented by the Air Travel Organiser's Licence (ATOL) scheme managed by the Civil Aviation Authority (CAA).
All tour operators selling flights and air holidays must hold a licence from the CAA, who ensure operators are properly managed and financially sound, and must lodge a bond - a financial guarantee provided by a bank or insurance company. If an operator fails, the CAA then uses the bond to pay for people abroad to continue their holidays and to travel home as planned, and to make refunds to those who have paid but not travelled. This protection does not extend to people who simply buy a flight from an airline unconnected to accommodation or any other element that, together with the flight, would otherwise form a package. They may however have some protection through payment by credit card.
Concerned about the decline in the proportion of people protected by the ATOL scheme, because of the growth of independent travel, the CAA submitted advice to Government on extending financial protection to all UK-originating international air travel by raising a levy on passengers to establish a fund from which compensation would be available in the event of a company failure. The CAA's advice to Government is available on: www.atol.org.uk or www.caa.co.uk
On 31 December 2005, the E111 will cease to be valid. From 1 January 2006, it will be necessary to have a European Health Insurance Card (EHIC) in order to receive healthcare that becomes necessary during a visit to an EEA country or Switzerland.
