§ Lord Mountevansasked Her Majesty's Government:
Whether they will introduce a scheme to compensate scheduled airline passengers for financial loss arising from the failure of an airline in the light of the Civil Aviation Authority's advice published in 1991.
§ Lord Brabazon of TaraWe have considered the Civil Aviation Authority's advice and have decided in principle that it would be desirable to introduce such a scheme, to provide financial protection for passengers who book tickets on UK airlines. We envisage that, in line with the CAA's advice, a fund would be set up from which any compensation would be paid, financed by a levy on UK airlines. I do not expect the levy to have a significant effect on fares. It would be of short duration (a matter of months) and should not exceed £1 per traveller. The scheme would complement the financial protection arrangements which already exist for people who book charter holidays by air.
My right honourable friend the Secretary of State for Transport is asking the Chairman of the Civil Aviation Authority to develop detailed proposals along these lines, and to consult as appropriate. Primary legislation would be necessary to implement such proposals and an opportunity to introduce such legislation will be sought in due course.