Air Travel Organisers’ Licensing Bill

Baroness Randerson Excerpts

2nd reading (Hansard): House of Lords
Tuesday 5th September 2017 Lords Chamber

[Baroness Randerson (LD)]

My Lords, this Bill is uncontroversial in its principles and most of its details. I express my gratitude to the Minister for the briefing that he provided earlier today, which was very helpful.

This is the sort of Bill that in normal political times would pass through this place very swiftly indeed. However, we are not, of course, in normal political times and I fear that the Government are keen to distract us from the big issue with something on which we can all agree. I think that we will agree across party that this is a worthwhile, useful and important updating of current legislation. Any controversy associated with the Bill lies in what it does not contain as these measures started life as part of the Vehicle Technology and Aviation Bill. I regret that this Bill is now so narrow in scope that we cannot talk about other important aspects associated with transport and aviation such as the danger posed by drones and lasers, which we could have talked about under the other Bill. After all, we have few enough opportunities to discuss transport issues in this House.

We should, of course, also discuss the impact of Brexit on our aviation industry, but this Bill does not provide that opportunity in full either. It is rather ironic that the first piece of legislation discussed in the other place following the general election was this Bill, which is designed to improve our links with the rest of the EU and the single market. This Bill makes it easier for UK holiday companies to attract customers living in other EU countries by allowing companies to operate within UK law rather than have to adopt 28 different sets of regulations. The Government’s intention to leave the single market means therefore that a great chunk of this legislation will probably become irrelevant within two years and life will again become difficult for travel companies wanting to trade with the rest of Europe. Package holiday companies face a period of intense uncertainty. What regulations will they have to follow after 2018 when operating abroad? We must remember that this is an industry which, by its nature, plans and books seats and accommodation years in advance. Indeed, many customers book their holidays at least one year in advance, and sometimes two, so the operators have to plan even further in advance. They need to know now what will happen in 2019; yet here we are, well over a year on from the referendum, and the Government are still arguing about the rules of the game, having wasted months on an unnecessary general election and now on internal squabbles.

In fact, this modest little Bill is a parable for the Government’s, and our country’s, problems with Brexit. The Bill updates the rules on compensation for consumers originally set down, as the Minister said, in the Civil Aviation Act 1982. It is needed because the world has changed since 1982. Vastly more of us travel abroad— 20 million holidaymakers per year are protected by ATOL. Most people no longer go into a travel agent, with more than 80% of us buying online. We travel across borders from one country to another almost without noticing—indeed, if you are travelling between the Schengen zone countries there is effectively no border to notice. We buy packages of travel much more flexibly, mixing and matching to suit ourselves. All of this reflects modern life, and any attempt to put the clock back will cause serious dislocation to the travel industry and serious inconvenience to the travelling public. But that is, in fact, what the Government intend to try to do. A decision to leave the single market and to go for hard Brexit means that we are trying to recreate the Britain of yesteryear, trying to reimpose those hard borders and the much more difficult decisions that we had to make in those days.

On the detail of the Bill, the Government rightly wish to ensure that we remain compliant with the updated EU package travel directive. We welcome the mutual recognition incorporated in Clause 1 which extends the scope of ATOL to provide protection to customers in the EEA who have bought package holidays from UK companies. This simplifies regulations for UK businesses and will make it easier for them to gain customers abroad, a fundamental principle of the single market.

Clause 2 allows the Government to create different protection schemes for different types of package holidays, to either extend ATOL or create a new scheme for customers purchasing linked travel arrangements. LTAs simply did not exist in 1982; they are essentially a creation of the internet. We welcome the principle that LTAs will be covered, but we question whether a separate scheme is needed; we fear that it could provide inferior rights and compensation than those provided to purchasers of full packages. We will be exploring this point in Committee.

The travel industry does not seem convinced that a separate scheme is needed, and the Government are hazy about what it should encompass or, indeed, whether it is needed. The Bill simply gives the Government the power to create the scheme, and I want a bit more certainty about this. I am reluctant to give the Government any more powers to do anything of this nature because of the mess they have made of so many of the powers they already have. I fear that a second protection scheme will simply encourage companies to restructure their offer to take the most advantageous position for them. I would welcome assurances from the Minister that the Government have given serious consideration to that point so that companies will not be enabled to play the market in that way to the disadvantage of consumers. After all, consumers do not necessarily know whether they are buying a full package or a linked travel arrangement. People do not speak in those terms when they discuss their summer holidays.

The power of a trust fund lies in the accumulated total which comes from many small individual receipts—in this case, £2.50 per traveller. I fear that it could be undermined if the concept is splintered, as the Government think they might decide to do. I am sure that the Minister will confirm that there have been times in the past when the existing ATOL scheme has been under financial pressure. I fear that splintering it into two different funds could intensify pressure.

By modernising the system and harmonising our rules with the rest of the EU, the Bill will help our aviation sector to flourish. We have the third largest aviation sector in the world and the largest in Europe. After all, 49% of passengers from the UK head to the EU, as do 54% of scheduled flights. Our tourism industry supports half a million jobs, and aviation is in a unique position legally. EU rules mean that any EU airline can operate freely within and between EU countries—a point I have previously raised here on several occasions. The EU has also negotiated other agreements across the world, of which we are part by virtue of our EU membership. The Government need to develop a sense of urgency about all this. The current aviation agreements need replacing before we leave the EU, otherwise, as Michael O’Leary said recently, our aviation industry will simply be grounded. If that happens, of course not only our holidays will be messed up. Hundreds of thousands of tourism and aviation jobs will be at risk, and it will fundamentally undermine our whole trade sector, because 40% of our trade goes by air.

Therefore, the Bill is an important step forward for consumers, as well as for the holiday industry—although people also get linked travel arrangements for business purposes. However, it is only one part of the massive jigsaw the Government face to keep our aviation sector flying and flourishing in the future.