ABI slams compulsory airline insolvency travel cover

The ABI has rejected suggestions, set to be released in an upcoming government review, that cover against airline insolvency should be made a compulsory part of travel insurance policies.

In its response to the Department of Transport’s Airline Insolvency Review, the ABI stated that travel insurance is already a highly competitive market and that introducing an additional level of mandated cover would be an unwelcome disruption.

The review was prompted in part by the collapse of Monarch Airlines in October 2017, which left 110,000 passengers without transport home.

It subsequently required the government to carry out the biggest ever peacetime repatriation programme, and the review was set up to find alternative models to protect passengers.

On launching the review in March, chair Peter Bucks said: “It is high time to take a fresh look at how well consumers are protected in the event of airline insolvency.”

But the ABI stated the move would limit customer choice and potentially act as a barrier to the take up of cover by adding additional expense.

Commenting on the industry, it said the issue is not the provision of cover, rather, it is the apparent lack of awareness amongst travellers of the range of consumer protections that are already in place such as through travel packages, credit cards and ATOL.

Charlie Campbell, senior travel policy adviser at the ABI, said: “Whilst we are fully supportive of measures that improve the level of protection consumers have whilst travelling abroad, the primary design of travel insurance is to cover the cost of expensive medical treatment.

“Introducing mandatory airline insolvency cover ignores the real issue of lack of awareness of cover already in place, whilst increasing costs and confusion.”

The ABI has instead backed the review’s consideration of a model that either extends or replicates the ATOL protections across all airlines, not just those which are part of package holidays, and supports a gap analysis of current consumer protections to identify the gaps and the overlaps.