HL Deb 12 October 2004 vol 665 cc114-5

2.43 p.m.

Lord Faulkner of Worcester asked Her Majesty's Government:

How they propose to respond to the Civil Aviation Authority's Advice on Financial Protection for Air Travellers and Package Holidaymakers in the Future.

Lord Davies of Oldham

My Lords, the Government are committed to ensuring that there is appropriate financial protection for leisure air travellers and are grateful to the CAA for its advice. Our initial response is to carry out a regulatory impact assessment of the proposal.

Lord Faulkner of Worcester

My Lords, I thank my noble friend for that reply. Does he share the view of the CAA and that of the Transport Committee in the other place that millions of British holidaymakers book in ignorance, directly on the Internet, with low-cost airlines and hotel suppliers, unaware that they would receive no protection whatever if the airline were disastrously to go bust? If this were to happen at the height of the holiday season, it would leave thousands of people stranded in holiday resorts around the world. In view of the fact that ATOL protection was invented in this country 30 years ago and has been followed by many other countries around the world, is it not essential that that protection is available for all leisure travellers?

Lord Davies of Oldham

My Lords, it is clear that the concept of ATOL protection needs to be updated and advanced. Many passengers who are now travelling on no-frill airlines and making up their own holiday packages are not covered by the existing ATOL arrangements. That is why the Civil Aviation Authority has indicated that new arrangements need to be made. These would involve some considerable costs on the industry and airline passengers and would require legislation. That is why the Government, while well aware of the nature of the problem and the European-wide concern over this issue, need to investigate the proposals before introducing the necessary legislation.

Lord Rotherwick

My Lords, does the Minister agree with the CAA that without government action the position will deteriorate sharply? When will the assessment be completed? When will we see action and not only assessments?

Lord Davies of Oldham

My Lords, the Government received the proposals of the Civil Aviation Authority only in July and we are currently carrying out the assessment. This is meant to be concluded by December this year. We will then look at the question of legislation. I can assure the House that we appreciate the attention drawn to this problem by the CAA and recognise it as an important issue which has to be tackled. We need to protect those many millions of passengers who at present think they have protection but may not have it. Of course, it is not only ATOL which offers protection—people who pay for their flights by credit cards often have protection—but, nevertheless, many of our fellow citizens have no protection. That is why this is an important issue.

Lord Bradshaw

My Lords, is it any wonder that so many people go without protection? Last week, I booked a ticket which was shown on the Internet as costing £51; I was charged £143. That illustrates the extent to which mis-selling and fraud is going on. Companies are taking tax, booking fees and so on off the price and then posting a price which is totally false. I urge the Government to take urgent action over the misuse of the Internet.

Lord Davies of Oldham

My Lords, there is an element of caveat emptor in regard to the Internet and looking at the fine print of one's travel insurance, which may or may not cover the failure of an airline. I hear what the noble Lord says. It is certainly the case that headline prices can conceal two matters: either additional costs, to which the noble Lord referred, or inadequacy of protection, which may be highly relevant to the consumer.

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