UK Government

Department for Transport: Improving the passenger experience at airports, New champion and broader financial protection for air travellers

Press Release   •   Dec 10, 2009 11:39 GMT

Passengers' needs are to be put at the heart of how airports are regulated and they are to get a new champion to represent their views, Transport Secretary Andrew Adonis confirmed today, while also unveiling proposals to improve the ATOL scheme of financial protection for air travellers and the wider aviation regulatory framework.

The proposals to reform the ATOL scheme are designed to reflect changes in the holiday market and make it easier for those booking holidays to understand whether their trip is covered or not. The changes could see a new wider “flight-plus” category introduced, to make clear that anyone booking a flight and another holiday component such as car hire or hotel will be protected by the scheme.

Andrew Adonis said:

"The ATOL scheme has remained a source of reassurance for travellers since it was drawn up in the 1970s.  However, since that time, there have been big changes to travel patterns.  The concept of a package holiday has become blurred, as many holidays are now sold through mix-and-match components.

"Consumers must be able to make informed choices. The changes we are proposing will help ensure that the scheme remains relevant to the way people book their holidays today and still offers excellent protection for travellers."

Other changes being confirmed today mean that the industry regulator, the Civil Aviation Authority (CAA) will be given a new primary duty for airport economic regulation to promote the interests of passengers, and Passenger Focus will get new statutory powers to represent air passengers as they already do for rail users and soon will for bus users, building on the work currently done by the Air Transport Users Council.

Andrew Adonis said:

"These measures will result in real improvements for air passengers and will help ensure that we get the most efficient and competitive aviation sector possible.

"I'd like to thank the Air Transport Users Council for all their work to help passengers.  I'm sure Passenger Focus will be a strong champion for their needs going forward."

The proposals to reform the ATOL scheme are now subject to a 12-week public consultation.  The same document also sets out the Government’s other proposals to ensure that the CAA can focus on the public interest.  These include new general objectives to ensure that the needs of the consumer and the environment are at the forefront of the CAA’s decisions, whilst maintaining an emphasis on safety; new powers to enable more targeted enforcement; and the ability to secure the publication of information where this is in the public interest.

Notes to editors

Proposed changes to the ATOL scheme

The Air Travel Organisers’ Licensing (ATOL) scheme is administered by the CAA and protects passengers of package holidays by air in the event of a travel company insolvency. The scheme meets a European requirement and ensures that customers abroad are brought home at the end of their

holiday, and that those yet to travel are reimbursed.

The objective of the reforms in the consultation is to provide greater clarity for consumers and the travel trade about the scope of ATOL protection for holidays and flights. ‘Flight plus’ measures are proposed whereby ATOL protection would include all sales of a flight together with another significant holiday element.

In addition, the consultation provides options to clarify the financial protection of flight-only sales, by parties other than an airline, so as either to include or exclude them from the ATOL scheme. It is further proposed that standard ATOL documentation should be issued to passengers so that they are clear about their financial protection status.

Reforming the framework for the economic regulation of airports

1.      The new primary duty on the CAA is part of a package of measures designed to reform the framework for the economic regulation of airports. The reforms are the result of a Review commissioned by the then Secretary of State in April 2008 and have been informed by the recommendations of a panel of independent experts, chaired by Professor Martin Cave. The measures were subject to a 12 week consultation which began on 9 March 2009.  The Government has also issued a further consultation on two financial elements of the Review that are published today.

Other measures confirmed today include:

-          A switch to a new licensing regime for larger airports: licensing - which is common in many regulated industries - allows greater flexibility than the current system and will enable the CAA to target regulatory activity where and when it is needed to protect the interests of passengers. The new regime gives the regulator sanctions and enforcement powers to incentivise licensee compliance.

-          Introduction of a new framework of merit based appeals to ensure the regulator is accountable for the decisions it makes.

-          Measures to improve outcomes for passengers by promoting the financial resilience of airports, including a specific financing duty on the CAA, and new licence conditions for larger airports.

2.      The CAA currently has four duties for the purposes of economic regulation, they are:

-          to further the reasonable interests of users of airports within the UK, users being defined (broadly comprising airlines, passengers and other user of air transport services at the airport);

-          to promote the efficient, economic and profitable operation of such airports;

-          to encourage investment in new facilities at airports in time to satisfy anticipated demands by the users of such airports; and

-          to impose the minimum restrictions that are consistent with the performance by the CAA of its functions under those sections.

3.      The measures confirmed today will replace these with a single primary duty and five subordinate duties:

Primary duty

-          to promote the interests of existing and future end consumers of passenger and freight services at airports in Great Britain, wherever appropriate by promoting effective competition.

Further duties

-          to have regard to the airport operator's legal obligations to comply with applicable environmental and planning law

-          to secure, so far as it is economical to meet them, that all reasonable demands for airport services are met efficiently;

-          to ensure that licence holders are able to finance the activities which are subject to the relevant licence obligations;

-          to have regard to guidance issued by the Secretary of State, as well as any National Policy Statement on Airports;

-          to have regard to the principles of Better Regulation, and to consult with stakeholders, including airlines.

New role for Passenger Focus

1. The Air Transport Users’ Council was set up in the 1970’s by the CAA. It is funded by a specific charge the CAA makes on the aviation industry. The CAA agrees its business plan, operational and financial objectives and performance indicators, and it appoints the AUC’s Chair, Council Members and Chief Executive. The AUC’s main focus has been on airline issues (where the customer has a contract) rather than those relating to airports or other stages of the wider end-to-end journey.

2. Passenger Focus is the statutory independent body responsible for representing the interests of Britain’s rail passengers. From April 2010, subject to Parliamentary approval, it will also begin representing bus and coach passengers. Primary legislation is required to allow Passenger Focus to expand its remit to air transport. We will introduce this at the earliest opportunity. In the meantime we shall be encouraging the two organisations to move closer together.

3. Once it has the required powers, we expect Passenger Focus to acquire quickly the necessary sectoral knowledge, ensuring that the expertise and experience built up within the AUC is transferred to Passenger Focus.

Consultation on Proposals to Update the Regulatory Framework for Aviation

1. This consultation sets out the Government’s further proposals to modernise the aviation regulatory framework in line with the findings of Sir Joseph Pilling following his strategic review of the CAA.

2.      Key proposals include:

-          New general objectives for the CAA which ensure that the CAA focuses its attention on:

o       pursuing the interests of consumers

o       maintaining a high standard of safety; and

o       seeking environmental improvements.

-          New powers for the CAA to secure the publication of information where this is in the interests of consumers or the those affected by aviation.

-          New powers to give the CAA access to a range of civil sanctions to enable the CAA to undertake more frequent and better targeted enforcement.

-          Measures to rationalise the process for making airport byelaws.

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