Airline Insolvency Review

Lord Grayling Excerpts

Thursday 9th May 2019 Written Statements

[The Secretary of State for Transport (Chris Grayling)]

We have a thriving aviation sector, with competition between airlines delivering choice of destinations and competitive fares for consumers, but occasionally airlines, like any business, do collapse. Over the past decade we have seen two of the largest airline failures in UK history, with the collapse of XL Airways and Monarch Airlines. In both situations, the Government of the day took a decision to ask the Civil Aviation Authority (CAA) to intervene to assist the repatriation of passengers.

When Monarch collapsed in October 2017, it could have left around 110,000 passengers overseas without a flight back to the UK. Given the specific circumstances and scale of the situation, the Government asked the CAA to launch an operation to ensure that all those abroad were offered an alternative flight to the UK. This involved the UK’s largest peacetime repatriation operation. In total around 85,000 passengers were returned to the UK, with 98% of them travelling on the same day as their original flight.

While this support in both the XL and Monarch situations helped to reduce the detriment for passengers, it also resulted in significant costs to the taxpayer. In the case of the Monarch repatriation, the final cost to the taxpayer has been assessed to be £40.5 million.

Following on from the experience of Monarch, I commissioned an independent airline insolvency review, chaired by Peter Bucks. The review has considered consumer protection in the event of an airline or travel company failure. The final report has been published today.¹ It draws on lessons from the collapse of Monarch Airlines and has considered both repatriation and refund protection to identify options to ensure passengers are protected and identified areas for further work.

We welcome the report and the work performed by Peter and his team. The Government are considering the range of options put forward by the review and will work swiftly to introduce the reforms that are needed to ensure a strong level of consumer protection and value for money for the taxpayer. In doing so we also need to consider the challenges faced by the aviation sector. We would welcome any views on the report’s recommendations and encourage stakeholders to respond as part of the ongoing consultation on Aviation 2050, which closes on 20 June.<sup>2

1</sup> https://www.gov.uk/government/collections/airline- insolvency

² https://www.gov.uk/government/consultations/ aviation-2050-the-future-of-uk-aviation

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