Air Travel Reserve Fund (Amendment) (Hansard, 23 December 1981)

§ Mr. R. A. McCrindle (Brentwood and Ongar)

I beg to move, That leave be given to bring in a Bill to extend the scope of the Air Travel Reserve Fund to provide compensation for passengers travelling by scheduled airline services in the event of the airline going into liquidation after the purchase of the ticket and subject to the full published fare having been paid. In seeking the leave of the house to introduce legislation to amend the Air Travel Reserve Fund Act 1975, I start by reminding the House that in the early 1970s we experienced the failure of several tour companies, particularly the Court Line, and that that led to pressure by consumer groups and others for the protection of holidaymakers. The result was the 1975 Act, under which a levy is imposed on each package tour to provide a fund from which losses can be made good and thereby prevent people from losing the holiday to which, in many cases, they have looked forward for almost a year.

Since then there has been little evidence of other tour operators going out of business, and as a result the fund has built up very substantially. Indeed, in the most recent report of the Air Travel Reserve Fund Agency it is stated that the accumulated fund increased in the past year by £1.9 million to £18 million.

The average holidaymaker, as a result of the Act and by the combination of the bonding of the operator and the control of the licence to act as a tour arranger, now feels considerably more secure than he did in the early 1970s. However, the protection extended through the Act is by no means complete, in that it refers exclusively to those who choose to take their holidays through a package tour arrangement. The protection does not extend to those, perhaps often heading in the same direction, perhaps even by the same airline, who are travelling on a normal ticket and not as part of a package. Nor does the cover of the 1975 Act extend to the business traveller or to those visiting friends and relatives abroad.

It is arguable that the loss sustained by people in the latter categories—for example, parents visiting children in Australia and New Zealand, who become stranded there because the airline goes out of business while they are away from the United Kingdom—is far greater than the losses of those who lose their package holidays. My proposal, therefore, is to extend the scope of the fund set up under the 1975 Act and to protect all passengers of an airline that goes out of business. It would be done by authorising the use of the fund's accumulated reserves, to which I have referred, for that purpose.

996 Who can deny that the economic failure of an airline is a serious possibility in 1981–82? Few would deny that airlines are in poor economic shape, partly because of the recession and partly because of the cut-throat competition, particularly across the Atlantic, which has led to inadequate returns and difficulties with cash flow. Everyone in the House will be delighted that Laker Airways appears to have been saved from extinction, but who can deny, merely judging by the press reports of the last few days, that it has been a very close run thing? Reports of the difficulties may have led some passengers to fly by other airlines, thereby intensifying the cash flow problems, whereas if my scheme had been in operation that would not have been so.

What I am proposing is good for the airlines and good for the consumer. If, as I hope, it never happens that an airline gets into such difficulties, so much the better. I am simply suggesting that we take the precaution of extending the area to which the fund applies to include those who are not covered by it at present. We shall have lost nothing if an airline does not get into difficulties, but we shall have achieved a more even-handed protection for the man who goes by charter aircraft and the man who flies by scheduled service.

In 1981 far more people than ever before went on their vacations by individual arrangements, which involves the purchase of an individual airline ticket, and more people are eschewing the attractions of the package tour. The cash is there in the fund. No additional call upon the taxpayer need be made, and the travel agents, among others, will be reassured that they will not be held responsible if an airline goes into liquidation after a client has purchased a ticket.

Finally, it is appropriate that I should introduce the Bill at the holiday season. It is certainly appropriate that we should recognise that it should be no function of the law to protect one type of passenger but not another.