Civil Aviation Bill

Fiona Bruce Excerpts

Monday 30th January 2012 Commons Chamber

[Fiona Bruce (Congleton) (Con)]

I welcome the Bill and propose to speak chiefly to clause 94, which amends section 71 of the Civil Aviation Act 1982 and improves ATOL protection for consumers, as I believe that these are the provisions that are of most interest to my constituents. To clarify why the proposals are so welcome, I will briefly outline the current ATOL scheme’s inadequacies that require remedying in order to meet the requirements of passengers in the 21st century.

The ATOL scheme, which was introduced in the ’70s, provides financial protection for consumers who purchase air package holidays in the event of a travel company going into insolvency. Affected passengers are entitled to a full refund if they are yet to travel or repatriation after completing their holiday if they have already reached their destination. However, the current ATOL scheme does not apply to airlines that are specifically excluded under legislation or to airline agents where airline tickets or a similar airline booking confirmation has been issued, which means that a booking made directly with an airline just for a flight on an aircraft they operate, for example by using their website, is not covered by ATOL. Airlines can sell flights and flight plus without providing financial protection, flight plus being a booking for a flight that is sold together with accommodation and/or car hire at the same time or within a day of each other. Many consumers are totally unaware that they have no financial protection for such bookings.

However, confusingly for consumers, under the 1990 EU package travel directive airlines are now required to provide financial protection for the sale of package holidays. In practice, some airlines sell package holidays with ATOL protection, but other airlines sell only flight plus without any statutory financial protection at all. Even more confusingly for the consumer, although the ATOL logo on websites and in brochures signifies that the business in question holds an ATOL licence and thus meets the CAA’s financial fitness criteria, that does not mean that every holiday the business sells is ATOL protected. The ATOL licence holder may sell holidays and travel arrangements that are not ATOL protected since they fall outside the legal scope of the current scheme. In effect, it is left to the consumer to check whether their holiday arrangements are covered by ATOL, but how many would know how to do that?

The last decade has seen important changes in the UK market for holidays and flights, particularly a move away from traditional package holidays in favour of independent travel. This has been facilitated by the emergence of low-cost, no-frills airlines and the use of the internet. Holidays are often created by consumers buying the various components from a range of flight, accommodation and other options. This might involve purchasing from a single provider or, in many instances, from linked websites. For instance, an airline website might contain a link to an accommodation provider’s site. Holidays created and sold in this way are often referred to as dynamic packaging, mix-and-match holidays, DIY packages or tailor-made holidays. This development could not have been foreseen when the ATOL scheme was introduced 40 years ago or when the package travel directive was agreed more than 20 years ago. Indeed, the proportion of ATOL protected holidays has dropped from 97% of all leisure flights in 1997 to less than 50% in 2010 and, if action is not taken, will undoubtedly decrease further.

There is therefore a strong case for reforming the ATOL scheme to reflect better today’s holiday market and so that consumers can be clear when their holiday is protected. The CAA agrees and has stated that

“ATOL needs reform… to remove the risk of increasing financial detriment to consumers.”

This is particularly so in the current economic climate, when significant sums from a household’s annual budget are spent on such transactions.

In addition, holidays purchased on an “agent for the consumer” basis are also in many respects outside the current ATOL scheme. Traditionally, travel agents act as agents for the supplier and sell holidays to customers on behalf of travel trade suppliers, but they can also sometimes act as agents for the customer and technically buy the holiday on their behalf. This is an important distinction. Agents for the consumer are not legally making flight accommodation available and so are currently not required to have an ATOL licence or to provide any other form of financial protection for holidays.

However, it can be difficult, if not impossible, for consumers to know in what capacity a travel agent is acting, which can create considerable detriment and uncertainty. In practical terms, the distinction is completely irrelevant for a consumer until they need to claim for cover and might find cover non-existent. Then it becomes very relevant indeed. Even some travel companies are not fully aware of what acting as “agent for the consumer” entails or their obligations to explain to consumers the implications for ATOL protection. In short, the current ATOL scheme no longer fulfils its intended purpose.

Clause 94, by greatly broadening consumer protection and bringing airlines and “agent for the consumer” transactions into the scope of the ATOL scheme, effectively brings the scheme into the 21st century. Following appropriate consultation, the Bill will enable the Secretary of State to make regulations requiring airlines to hold and act in accordance with an ATOL licence when making available flight accommodation, except where they are doing so on a flight-only basis on aircraft that they operate. For the purposes of the clause, flight accommodation is taken to mean accommodation for the transport of persons on flights in any part of the world. In effect, all airline package holiday and flight-plus sales are to be ATOL protected. Having said that, some exceptions remain, and I welcome the discussions, which have been referred to, between ATOL and representatives from the Transport Committee on the possibility of ATOL cover being widened even further. I very much welcome the Bill and the effect it will have in providing additional consumer protection.

Before concluding my remarks, I want to touch on another point relating to passenger protection: pilot fatigue. Although perhaps peripheral to the Bill’s main aims, this issue is vital to the many pilots in my constituency who work out of Manchester airport and, in turn, to their passengers’ welfare. I have spoken with a number of pilots about the matter and attended briefings, in the House and elsewhere, where it has been raised with great concern. Pilots in my constituency are extremely concerned that any relaxation of this country’s current restrictions on permitted crew flight hours could push pilot fatigue to intolerable levels and seriously affect passenger safety. The issue was raised in the other place only last week by the noble Lord Monks, who is president of the British Airline Pilots Association.

Pressure on crew and aircraft for turnarounds is increasing as demand for air travel rises, and this is reflected in the requirements that airlines are putting on pilots. The European Aviation Safety Agency has made proposals that would reduce the current UK standards on flight time limitations. The Government spokesperson in the other place replied to the noble Lord Monks that the Government would support the proposed requirements only if the CAA determines that they provide an appropriate level of protection against crew fatigue. That was a welcome comment pointing in the right direction.

[Mark Lazarowicz]

I have been contacted by many of my constituents who work in the aviation industry, including pilots, and who are extremely concerned about the proposals. I am sure that the whole House is with the hon. Lady in wanting to see the Government and the European authorities ensure that no danger to safety is brought about by the proposed changes.

[Fiona Bruce]

I thank the hon. Gentleman for that intervention.

In responding to the debate, will the Minister clarify how in practice such an important determination will be made in light of the delegated powers that are going to be passed to the CAA under the revised regulatory regime and the fact that when introducing the debate the Secretary of State said that CAA decisions should be “guided by the needs of customers” and that the safety of customers was of “key importance”, and, finally, bearing in mind that the Secretary of State remains ultimately responsible for aviation safety and security?

I welcome the Bill.