Talking point: Is now the time for Atol protection reform?

Talking point: Is now the time for Atol protection reform?

The collapse of Monarch – and the government’s intervention to bring passengers home – has raised questions about customer protection, says Anthony Pearce

If anything good comes from the collapse of Monarch it will be long overdue reform to Atol protection. In the wake of the company’s demise, Chris Grayling, the transport secretary, told the House of Commons that “efforts [will] turn to working through the reforms necessary to ensure passengers do not find themselves in this position again”. His unexpected intervention will be music to the ears of many in the industry following the decision to fly home 110,000 stranded Monarch customers, in what he called the “largest ever peacetime repatriation”.

A minority of passengers were on package holidays protected by Monarch’s Atol, meaning the government’s intervention has further muddied an already misunderstood scheme and set an uneasy precedent. As Mark Tanzer, Abta’s chief executive, said at the annual Travel Convention in the Azores, “the industry is left wondering what is the point of Atol protection if everyone gets brought home anyway?”

He noted that the Monarch collapse accentuated “that the current system of customer protection is not understood and has a gaping hole”, adding that the clarity of the Atol schemed “has been blurred by the myriad ways in which travel arrangements are now assembled”.

The industry is left wondering what is the point of Atol protection if everyone gets brought home anyway?

After the company announced it was folding, the Civil Aviation Authority (CAA) scheduled more than 500 flights to return passengers. Despite Grayling’s assertion to the transport select committee that Greybull Capital, which bought Monarch in 2014, had a “moral obligation” to contribute to the cost, it’s likely now that the taxpayer will have to foot this bill, while some MPs have raised concerns that Greybull could profit as a secured creditor.

Greybull’s takeover cost Monarch’s staff thousands in pension cuts and, ultimately, their jobs on the day of the collapse, raising many ethical questions, but as Grayling has himself noted, there is “no formal legal mechanism” to make them pay for repatriation. Grayling’s comments that he will try to recoup costs from “third parties” – tour operators – has unsurprisingly provoked fury.

Derek Moore, chairman of the Association of Independent Tour Operators (AITO), delivered a scathing assessment, calling it the work of an “unpopular” government trying to win votes.

“When Monarch goes down, and the majority of seats are seat-only and not covered [by Atol], I can only assume that because the Conservatives were having a conference, and because they’ve got a slim majority and are not very popular, they decided to take some decisive action,” he told The Independent. “They are now saying, ‘You have to pay £250 as an operator for people to be repatriated.’ The travel industry is, frankly, disgusted.”

“Either the government sticks to the position that if you’re unprotected you’re on your own – which requires an honest communication campaign with members of the public – or they decide on principle to bring home stranded passengers, in which case they need to have a fighting fund raised by a levy on all airlines,” Tanzer said. “Abta has long argued for an all-flights levy, and been rebutted by successive governments, but surely the Monarch example makes an unanswerable and urgent case for revisiting the issue?”

A spokesperson for the CAA told Cruise Adviser: “We know that Monarch’s decision to stop trading was very distressing for all of its customers and employees. This was the biggest UK airline ever to cease trading, so the government asked the CAA to support customers who were abroad. The two-week flying programme is now complete, with 98 per cent of passengers arriving home on the day of their original departure.

“We will continue to support Atol-protected customers yet to return to the UK and have already started to refund Atol-protected passengers who have sadly lost their holiday.”

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