Airlines should add a levy of “less than 50p” per ticket to pay for the repatriation of passengers when carriers go bust, according to a government-commissioned review.
The review was commissioned following the collapse of Monarch in 2017 which saw the Civil Aviation Authority (CAA) rescue 85,000 passengers at a cost to taxpayers of £40.5m.
But airlines have rejected the proposal, with the owner of British Airways saying customers “should not be charged a levy to bail out other carriers”.
Peter Bucks, who chaired the Airline Insolvency Review, said: “We know passengers expect to be protected from being stranded overseas if their airline should collapse, but in practice, each year many people fly without such protection.
“Although airline insolvencies are relatively rare, as we have seen in recent months they do happen – and at times have required government to step in to repatriate passengers at great cost to the taxpayer.”
When an airline goes bust, some passengers left stranded abroad are protected under the ATOL scheme covering package holidays – but that does not cover flights booked directly with airlines.
Those who are not protected have to make their own arrangements and seek refunds from credit or debit card firms or through travel insurance policies.
But in Monarch’s case, the CAA stepped in because of the scale of the collapse – the biggest ever for a UK airline – and the number of passengers that needed repatriating.
The proposed seat levy would create a Flight Protection Scheme fund to safeguard holidaymakers stranded abroad when an airline goes bust.
In addition, the review recommended that UK rules should be reformed to allow an airline’s own aircraft to be used to repatriate passengers if it fails.
But Tim Alderslade, chief executive of industry body Airlines UK, said: “Airlines face rising costs and this is not the time to make it more expensive to travel.
“Fifty pence may not sound much but airlines operate on wafer-thin margins and passengers already pay over £3bn each year to the Treasury in air passenger duty.”
Transport Secretary Chris Grayling said: “We will now consider the range of options put forward by the review, and will work to swiftly introduce the reforms needed to secure the right balance between strong consumer protection and the interests of taxpayers.”
International Airlines Group, which owns British Airways, Iberia and Aer Lingus, said: “Airline passengers should not be charged a levy to bail out other carriers when they go bust.”