Air Travel Organisers’ Licensing Bill

Baroness Randerson Excerpts

2nd reading (Hansard): House of Lords
Tuesday 5th September 2017 Lords Chamber

[Baroness Randerson (LD)]

My Lords, this Bill is uncontroversial in its principles and most of its details. I express my gratitude to the Minister for the briefing that he provided earlier today, which was very helpful.

This is the sort of Bill that in normal political times would pass through this place very swiftly indeed. However, we are not, of course, in normal political times and I fear that the Government are keen to distract us from the big issue with something on which we can all agree. I think that we will agree across party that this is a worthwhile, useful and important updating of current legislation. Any controversy associated with the Bill lies in what it does not contain as these measures started life as part of the Vehicle Technology and Aviation Bill. I regret that this Bill is now so narrow in scope that we cannot talk about other important aspects associated with transport and aviation such as the danger posed by drones and lasers, which we could have talked about under the other Bill. After all, we have few enough opportunities to discuss transport issues in this House.

We should, of course, also discuss the impact of Brexit on our aviation industry, but this Bill does not provide that opportunity in full either. It is rather ironic that the first piece of legislation discussed in the other place following the general election was this Bill, which is designed to improve our links with the rest of the EU and the single market. This Bill makes it easier for UK holiday companies to attract customers living in other EU countries by allowing companies to operate within UK law rather than have to adopt 28 different sets of regulations. The Government’s intention to leave the single market means therefore that a great chunk of this legislation will probably become irrelevant within two years and life will again become difficult for travel companies wanting to trade with the rest of Europe. Package holiday companies face a period of intense uncertainty. What regulations will they have to follow after 2018 when operating abroad? We must remember that this is an industry which, by its nature, plans and books seats and accommodation years in advance. Indeed, many customers book their holidays at least one year in advance, and sometimes two, so the operators have to plan even further in advance. They need to know now what will happen in 2019; yet here we are, well over a year on from the referendum, and the Government are still arguing about the rules of the game, having wasted months on an unnecessary general election and now on internal squabbles.

In fact, this modest little Bill is a parable for the Government’s, and our country’s, problems with Brexit. The Bill updates the rules on compensation for consumers originally set down, as the Minister said, in the Civil Aviation Act 1982. It is needed because the world has changed since 1982. Vastly more of us travel abroad— 20 million holidaymakers per year are protected by ATOL. Most people no longer go into a travel agent, with more than 80% of us buying online. We travel across borders from one country to another almost without noticing—indeed, if you are travelling between the Schengen zone countries there is effectively no border to notice. We buy packages of travel much more flexibly, mixing and matching to suit ourselves. All of this reflects modern life, and any attempt to put the clock back will cause serious dislocation to the travel industry and serious inconvenience to the travelling public. But that is, in fact, what the Government intend to try to do. A decision to leave the single market and to go for hard Brexit means that we are trying to recreate the Britain of yesteryear, trying to reimpose those hard borders and the much more difficult decisions that we had to make in those days.

On the detail of the Bill, the Government rightly wish to ensure that we remain compliant with the updated EU package travel directive. We welcome the mutual recognition incorporated in Clause 1 which extends the scope of ATOL to provide protection to customers in the EEA who have bought package holidays from UK companies. This simplifies regulations for UK businesses and will make it easier for them to gain customers abroad, a fundamental principle of the single market.

Clause 2 allows the Government to create different protection schemes for different types of package holidays, to either extend ATOL or create a new scheme for customers purchasing linked travel arrangements. LTAs simply did not exist in 1982; they are essentially a creation of the internet. We welcome the principle that LTAs will be covered, but we question whether a separate scheme is needed; we fear that it could provide inferior rights and compensation than those provided to purchasers of full packages. We will be exploring this point in Committee.

The travel industry does not seem convinced that a separate scheme is needed, and the Government are hazy about what it should encompass or, indeed, whether it is needed. The Bill simply gives the Government the power to create the scheme, and I want a bit more certainty about this. I am reluctant to give the Government any more powers to do anything of this nature because of the mess they have made of so many of the powers they already have. I fear that a second protection scheme will simply encourage companies to restructure their offer to take the most advantageous position for them. I would welcome assurances from the Minister that the Government have given serious consideration to that point so that companies will not be enabled to play the market in that way to the disadvantage of consumers. After all, consumers do not necessarily know whether they are buying a full package or a linked travel arrangement. People do not speak in those terms when they discuss their summer holidays.

The power of a trust fund lies in the accumulated total which comes from many small individual receipts—in this case, £2.50 per traveller. I fear that it could be undermined if the concept is splintered, as the Government think they might decide to do. I am sure that the Minister will confirm that there have been times in the past when the existing ATOL scheme has been under financial pressure. I fear that splintering it into two different funds could intensify pressure.

By modernising the system and harmonising our rules with the rest of the EU, the Bill will help our aviation sector to flourish. We have the third largest aviation sector in the world and the largest in Europe. After all, 49% of passengers from the UK head to the EU, as do 54% of scheduled flights. Our tourism industry supports half a million jobs, and aviation is in a unique position legally. EU rules mean that any EU airline can operate freely within and between EU countries—a point I have previously raised here on several occasions. The EU has also negotiated other agreements across the world, of which we are part by virtue of our EU membership. The Government need to develop a sense of urgency about all this. The current aviation agreements need replacing before we leave the EU, otherwise, as Michael O’Leary said recently, our aviation industry will simply be grounded. If that happens, of course not only our holidays will be messed up. Hundreds of thousands of tourism and aviation jobs will be at risk, and it will fundamentally undermine our whole trade sector, because 40% of our trade goes by air.

Therefore, the Bill is an important step forward for consumers, as well as for the holiday industry—although people also get linked travel arrangements for business purposes. However, it is only one part of the massive jigsaw the Government face to keep our aviation sector flying and flourishing in the future.

Air Travel Organisers’ Licensing Bill

Baroness Randerson Excerpts

Committee: 1st sitting (Hansard): House of Lords
Wednesday 11th October 2017 Grand Committee

[Lord Rosser (Lab)]

I apologise for my late arrival; I had to be on the Front Bench for the Home Office Private Notice Question in the Chamber. I do apologise for the delay I have caused.

I will be brief in speaking to the amendments. Their purpose is to raise the issue of linked travel and flight-only arrangements in relation to ATOL protection. In respect of linked travel arrangements, the Minister said that the Bill would extend protection to consumers making these less formal holiday arrangements. Can he say which clause or subsection says this specifically, or is this a matter that the Government intend to address in regulations? If it is the latter and the Government intend to address it in regulations, why not include the extension of the protection to linked travel arrangements on the face of the Bill, as provided for in my Amendment 2? I take it that linked travel arrangements will be quite significant. Will the Minister let me know, either now or later, what proportion of what I would describe as ATOL sales the Government think linked travel arrangements will make up? Are they contemplating a new separate air travel trust for linked travel arrangements, in view of later clauses?

Turning to flight-only arrangements, one issue that surfaced during the debate on the Monarch Airlines Statement on Monday was the very low percentage of Monarch passengers covered by the existing ATOL provisions. I think the Minister said it was likely to be some 10% to 15%, and that this percentage was unlikely to have been much higher even under the provisions of the revised EU directive and the Bill. As I understand it, that is because nearly all Monarch Airlines passengers were flight-only. The Government decided, particularly because of the numbers involved, to provide flights back home for those Monarch passengers stranded abroad. This is a power the Government have but as I understand it, it is entirely up to them when and if they use it. Surely that can only create a degree of uncertainty, which is not a desirable state of affairs, certainly not for stranded airline passengers.

I put it to the Minister that the Government should consider setting out clear criteria against which they will determine whether to provide flights back home for stranded flight-only passengers whose airline has become insolvent or, alternatively, consider extending the ATOL protection scheme to flight-only passengers, who made up the vast majority left stranded by the demise of Monarch Airlines. Perhaps in that regard, the Minister could give an estimate of the cost to travel organisations of extending the ATOL protection scheme in this way.

Can the Minister expand on the paragraph in the Government’s Statement on Monarch Airlines on Monday? It reads:

“But then our efforts will turn to working through any reforms necessary to ensure that passengers do not find themselves in this position again. We need to look at all the options, not just ATOL, but also whether it is possible for airlines to be able to wind down in an orderly manner and look after their customers themselves without the need for the Government to step in. We will be putting a lot of effort into this in the weeks and months ahead”.—[Official Report, 9/10/17; col. 46.]


What do the Government include in “look at all the options”? Can I take it that this will include flight-only passengers not ending up being stranded abroad with no automatic provision available to fly them back home at no additional cost? I beg to move.

[Baroness Randerson (LD)]

I thank the noble Lord for his remarks, which have provided a useful introduction to his thinking. Clause 1(3) inserts new subsection (1E) into Section 71 the 1982 Act to clarify that the Secretary of State can make regulations to exempt any form of flight-only arrangement from ATOL. As the noble Lord, Lord Rosser, said, most of the passengers in the Monarch situation were not covered by ATOL arrangements, but it inevitably leads one to reconsider the situation and what needs to be done—we will refer to this later on. The key question is whether it is desirable for flights-only to be covered by some kind of scheme of the ATOL type. That would inevitably mean an addition to the cost of flights. In the case of low-cost airlines, it would be a significant addition to the cost of a short-haul flight. In a situation of what I think the Minister will agree is brutal price competition, I suspect, although I do not know, that the airlines would not welcome any additional costs of this nature.

On Monday, the Minister emphasised the massive scale of the repatriation that the Government, via the CAA, have undertaken, and it has been a very effective way of dealing with the problem. However, Monarch was a small airline. It might have been, as the headlines said, the biggest repatriation since D-Day, but it was a small airline that went bust. When one combines the size and complexity of that situation with the issue of linked travel arrangements and the possible development of such a concept, we have to consider what sort of compensation should be available to people throughout the market. We are in a rapidly changing market and just because airlines seem to be in robust health at the moment, it does not mean, in the uncertain future we face, that this will necessarily continue in the decades ahead. I would welcome the Minister’s comments on what forms of compensation the Government are considering for those in situations where airlines go into liquidation, and by contrast what compensation should be considered for those who still stick to the old-style package holiday arrangements—if I can call them that.

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Moved by

[Baroness Randerson]

3: After Clause 1, insert the following new Clause—
“Potential impact of leaving the European Union on consumer protection under the ATOL scheme
(1) The Secretary of State must carry out an assessment of the potential impact that leaving the European Union will have on consumer protection in the United Kingdom under the Air Travel Organisers’ Licence scheme.(2) The Secretary of State must lay a report of the assessment before Parliament within the period of 12 months beginning with the day on which this Act is passed.”

[Baroness Randerson]

My Lords, Amendment 3 would insert a new clause to deal with the potential impact of leaving the EU on consumer protection under the ATOL scheme. It asks the Secretary of State to carry out an assessment and to lay a report before Parliament within 12 months of this Act passing. The key question is whether consumer rights and protection in this respect will be reduced on leaving the EU. The Minister made much of the fact that the UK was ahead of the game many years ago when it set up the ATOL scheme. He said that in some respects the rest of the EU was catching up with us with the 2015 EU package travel directive.

The Bill is designed to bring us in line with the rest of the EU—an organisation we are about to leave. It is obviously of considerable importance that we understand the potential impact of the various stages of the Brexit process. As I understand it, the Government are no longer suggesting that we can get everything sorted by March 2019, so I assume there will be a transition period. But we will not be members of the EU at that stage, according to statements made by several Ministers. Instead, we will be mirroring EU membership to a greater or lesser extent. Since so much of the legislative structure surrounding aviation and the relevant international agreements are not specifically part of EU membership—but we are nevertheless signed up as members of the EU—there seems to be a particular danger that the aviation sector will be at the sharp edge of decision-making. Certainly, the sector feels that it is important that it is at the leading edge of decision-making. There is uncertainty associated with that, of course.

If the worst happens—not the scenario I have just outlined but the worst—and we crash out of the EU without a deal, what will happen to the additional rights and safeguards conferred by the Bill? I expect that the Minister will say that they will remain as they will be enshrined in UK law. However, if we crash out without a deal, all bets are off. We will no longer be obliged to mirror EU consumer protections. Some Ministers have spoken in terms which suggest that the more bargain-basement approach to international trade might be the preferred option.

As marketing methods and IT develop, this is an increasingly complex area. Today’s discussion has already reflected that. The Monarch case illustrates that complexity, with only about 14% of people covered by ATOL. People can sit next to each other on the same plane and stay at the same hotel but be entitled to different compensation or no compensation, according to their method of payment. Did they pay for it as a package holiday—a single entity? Did they pay for it as separate parts? Did they pay by credit card or PayPal, in which case they would get protection? In some ways, I gather, this can be enhanced protection. If they paid by debit card, they would not get that protection—they would not get compensation. It is worth noting that there is often a superficial financial incentive to pay by debit card because many websites now charge for paying by credit card.

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[Lord Callanan]

I start by saying that I fully endorse the purpose of the proposed new clause. In the coming years we will be embarking on major changes in our relationship with Europe, and it is very difficult to predict where the negotiations will end up. Therefore, it is important to begin by offering assurances that the Government would want UK consumers to continue to enjoy strong protections and an effective consumer regime, whether inside or outside the EU. I am sure that is something that all parts of the Committee can agree on. The UK has always been a leader when it comes to providing protection for holidaymakers. After all, as the noble Baroness said, we set up the ATOL scheme in UK legislation several years before the original package travel directive was agreed in Europe. That is a significant point. It means that the ATOL legislation is not dependent on the package travel directive. This Bill will harmonise ATOL with the package travel directive in the immediate term. However, the ATOL legislation and the protection will still exist and remain in place as we leave the EU.

Notwithstanding this, I fully understand why this amendment has been proposed in order that we consider the ongoing impact on consumer protection as we leave the European Union. However, this is catered for in the legal and policy framework already in place. There is already a legal duty on the Government to review under the Small Business, Enterprise and Employment Act 2015. This places an obligation on us to undertake a post-implementation review within five years of passing legislation.

Furthermore, we already have an independent review body in place to provide an ongoing review of the financial protection available for air travellers. The Air Travel Insolvency Protection Advisory Committee— or ATIPAC, the snappy acronym by which it is more commonly known—was set up by the Labour Government in 2000. Its purpose is to provide advice to the Civil Aviation Authority, the Air Travel Trust and the Secretary of State for Transport on policies that should be pursued to protect consumers. The committee consists of representatives of industry, consumers, the CAA and Trading Standards. This means that it is very well placed to provide an informed and independent view on policies. The committee already submits a substantial report to the Secretary of State every year, which is also published on the CAA and ATIPAC websites. This report should draw to the Secretary of State’s attention any concerns on which, in ATIPAC’s view, further action is necessary to maintain strong consumer protection. This includes advice on changes in the market and, where appropriate, their potential impact on consumers and the financial protection arrangements.

I am sure that the committee is already minded to keep a close eye on consumer protection, both before and after we leave the EU. In fact, my colleague the Minister of State for Transport in the other place, the right honourable John Hayes MP, has already asked the committee’s chair, John Cox, to consider this precise point in the ATIPAC 2017-18 annual report. These reports will be submitted to the Secretary of State within four months of the end of each financial year and will, as I said, be published on the CAA and ATIPAC websites at the same time.

I turn now to the specific questions posed by the noble Baroness, Lady Randerson. How do consumers know what is or is not a linked travel arrangement? The package travel directive specifies that businesses must inform the consumer whether or not they are purchasing an LTA before they make the purchase. Given the complications that I referred to in my previous answer, the way this will be done in practice will be considered in the consultation that we will publish later this year.

The noble Baroness also asked what will happen to this Bill if we leave the EU with no deal. ATOL will continue, as the amendment states, and this House will decide on any changes that are to be made, deal or no deal. The Government remain committed to strong consumer protection and will continue to be so after Brexit.

In the light of those answers, I hope the noble Baroness will withdraw her amendment.

[Baroness Randerson]

I thank the Minister for that answer. The Air Travel Insolvency Protection Advisory Committee—a name which does not trip off the tongue of everyone in the pub at the weekend—reports to the Secretary of State. Is that report published? Has that report ever been debated in Parliament? If it has, what is the process to enable a debate about the annual report from ATIPAC?

I am very pleased to hear that there will be consultation. Can the Minister assure us that when the regulations are eventually produced they will reflect the need not just to follow the letter of the law but to give clear and prominent information to consumers about what they are purchasing and that there will be a way of ensuring that people are made much more aware of the difference between using PayPal and credit cards on one side and debit cards on the other?

I fear that we all get used to clicking on terms and conditions. We gave up reading the small print many years ago because it is carefully designed to deter all but the most obsessive and leisurely person. We need some kind of widely recognised industry standard that is easily understandable to people who do not devote their lives to consumer protection issues so that they know the difference between one sort of package of measures they are buying and another. I wonder whether the Minister is able to give some reassurance on that.

[Lord Callanan]

I think I am able to provide the reassurance that the noble Baroness is looking for. ATIPAC reports are published on the CAA and ATIPAC websites, but if the noble Baroness would find it helpful I would be happy to place a copy in the Library of the House to make them more widely available. I am not sure that many people would want to read them, but I am happy to do that if the noble Baroness would find it useful. I am not aware that the report has ever been debated in this House or the other place, but time is made available for general debates and Opposition day debates and I am sure that through discussions among the usual channels time could probably be made available for a debate on the topic. I cannot give a commitment on behalf of the House authorities, but if the noble Baroness wishes for such a debate, I am sure her party leadership could pursue those discussions.

The noble Baroness made a very good point about information provision. Consumers need to be kept fully informed about the differences—whether it is a linked travel arrangement or a package that they are purchasing—and the relevant levels of protection that will apply. That is something that we want to explore in the consultation. As I said, the linked travel arrangement is a new concept, introduced by the directive. It is not entirely clear exactly what one would comprise at the moment. In the consultation that we will be issuing on the draft regulations, we will want to explore how consumers could be made aware of and kept informed about the difference in levels of protection. We are adding an additional level of complication into what is currently a relatively simple, well-understood scheme. The information provisions exist in the directive and we will be looking to implement those through secondary legislation in the public consultation that we will hold. I hope that answers the noble Baroness’s question.

[Baroness Randerson]

I thank the Minister for his answer. I am happy to withdraw the amendment.

Amendment 3 withdrawn.

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Moved by

[Baroness Randerson]

5: Clause 2, page 1, line 22, at end insert—
“(6A) Any amendments to the definition of “Air Travel Trust” in subsection (5) may not be laid before Parliament until the Secretary of State has published a full impact assessment and undertaken a consultation on the proposed amendments.”

[Baroness Randerson]

Amendment 5—it seems that Amendment 6 is very similar—addresses Clause 2, in which the Government are asking us to give them a power to set up a separate trust for linked travel arrangements. It is a very open-ended power which runs counter to the Government’s actions of the week before last. When Monarch failed, the Government decided, very sensibly, to organise repatriation for all customers of Monarch regardless of whether they had bought package holidays or simply a flight. In essence, the Government were setting aside the special status of package holiday customers, for which they had each paid £2.50. The Government’s action might have been sensible, but it rather undermines the Minister’s argument at Second Reading that it might not be appropriate for one group of more cautious customers to have to subsidise, perhaps indirectly, compensation for other customers who chose a more risky option.

The Monarch case has also illustrated the sheer size and impact of such a failure. The current ATOL trust struggled for some years with more calls on its funds than it could cope with, and it had to be subsidised by the Government. It has been in good health recently, but that history is there. Any fund like this succeeds because it agglomerates many small sums of money into one large total. If you start setting up several funds, you are disaggregating the total money available, and that undermines the principle.

The Minister has been absolutely clear by indicating that currently the Government have no intention of setting up a new trust fund but just want the power to do so if they choose to in the future. This is a dangerous principle which is increasingly creeping into government legislation whereby the Government are gathering up “just in case” powers, giving no clear indication of how they intend to use them. I would argue that they have to do better than that in order to justify including this power in the legislation. We need a more detailed justification, a consultation and an impact assessment before this additional wide power can be considered acceptable. We oppose the power in principle as well as being concerned about the practical impact if it is used. I beg to move.

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[Lord Callanan]

As we said in the Statement, we will be looking at the feasibility of extending the ATOL scheme. I referred earlier to some of the difficulties involved in that. We have also said that we will look at the insolvency regime, but that does not necessarily provide an easy answer. We are looking at the circumstances. We are still in the middle of the repatriation operation, but we will look at the circumstances and see whether there is anything we can do that would obviate the need for government to step in in future.

I have given reasons why these amendments are unnecessary, along with assurances, particularly with regard to full consultation and providing impact assessments. The Government have a good record in this area, which I have already outlined. We have consulted on these and all previous changes and have produced impact assessments, so I hope that the noble Baroness will withdraw her amendment and the noble Lord, Lord Rosser, will not move his amendment.

[Baroness Randerson]

I thank the Minister for his detailed answer. I entirely understand that the Monarch situation was unusual, but every situation is in its way unique. I appreciate the dilemma the Government found themselves in. I was simply exploring the basic principles on which the compensation system is based. I will read the record carefully, but I am still to be fully convinced by the Minister’s response in relation to the need for additional trust funds. If he is able to give us any further information about the Government’s plans in relation to that, not this afternoon, but in writing, it would be helpful.

I am grateful for the Minister’s confirmation that there will be an impact assessment, but I wonder whether he can confirm now in one or two words what he means when he says that the Government will shortly launch a consultation on detailed regulations associated with this Bill. What does “shortly” mean?

[Lord Callanan]

I cannot say it in two words, but would “before the end of the year” help clarify what I mean?

[Baroness Randerson]

That is very helpful. As ever, the House of Lords has been able to deal with this important issue with more brevity than the House of Commons, and I am happy to beg leave to withdraw the amendment.

Amendment 5 withdrawn.

Air Travel Organisers' Licensing Bill

Baroness Randerson Excerpts

Report stage (Hansard): House of Lords
Wednesday 25th October 2017 Lords Chamber

[Lord Rosser (Lab)]

My Lords, in the Government’s Oral Statement on Monarch Airlines of 9 October, the Secretary of State said that,

“right now our efforts are rightly focused on getting employees into new jobs and getting passengers home. After that, our effort will turn to working through any reforms necessary to ensure that passengers do not find themselves in this position again. We need to look at all the options—not just ATOL, but whether it is possible to enable airlines to wind down in an orderly manner and look after their customers themselves, without the need for the Government to step in. We will be putting a lot of effort into that in the months ahead”.—[Official Report, 9/10/17; Commons, cols. 27-28.]

The demise of Monarch Airlines, along with the Secretary of State’s Statement, has raised questions about the current UK financial protection regime generally for air travellers. The ATOL scheme is intended to ensure that those who purchase ATOL-protected flights and holidays are flown home at no extra cost if an ATOL company fails. However, the scheme does not offer that protection to customers who buy airline seats from airlines which are not within the ATOL scheme.

The Government have estimated that the proportion of Monarch Airlines passengers affected who were covered by the ATOL scheme and ATOL protection amounted to some 10% to 15%. As we know, the Government decided to step in and repatriate Monarch’s passengers regardless of whether they were among the small minority who were protected by the ATOL scheme, a decision which would appear at least to raise questions about the current scheme and arrangements.

While this Bill will update existing powers to enable different and separate arrangements to be established to align with new practices, such as linked travel arrangements, there remains a gap in consumer protection for flight-only seats sold by airlines, despite—I understand, perhaps incorrectly—the industry and the CAA’s previous calls for such a protection regime. The Bill does nothing to address that gap.

The amendment, whose intention has the support of ABTA, would through its proposed deletions to the 1982 Act provide an opportunity for the Government to say how they intend to review and update the existing arrangements and regulations, particularly in respect of flight-only travel under the Civil Aviation Act 1982, to ensure the protection of passengers in the event of a future airline failure—which as I understand it from the Secretary of State’s Statement of 9 October is, at least in part, what the Government intend and want to do.

It is really a matter for the Government, in consultation with the industry and consumers, to determine the precise framework and model for delivering any new protection regime. The Government appear to be looking for a new arrangement which would ensure that passengers in any subsequent Monarch situation are flown home at no extra cost but at the lowest possible cost to the taxpayer and, presumably, to the airlines in particular and the travel industry in general.

A substantial proportion of the failure costs incurred in the ATOL scheme over the years has related to airline failures: Clarksons with Court Line; Laker and Arrowsmith Holidays with Laker Airways; ILG with Air Europe; XL Leisure Group with XL Airways; and now Monarch Travel Group with Monarch Airlines. These failures have also led to significant costs being incurred either by customers not protected under the ATOL scheme or by the taxpayer. Travel companies are also affected by the failure of an airline as they are liable for all aspects of a package holiday under the package travel regulations. While the exclusion of airlines from a scheme of protection means that their customers are not protected against financial loss, in practice those passengers—both British and those in other European countries such as Italy and Germany—have been repatriated at a cost to taxpayers and other industry participants. This surely adds to confusion when failure occurs, particularly around what is and what is not protected under the ATOL scheme. There is also a lack of clarity around the meaning of the ATOL-protected branding and ABTA has consistently called for it to be made much clearer that ATOL protection applies only to a particular set of holiday arrangements rather than the company as a whole.

The amendment is designed to provide the Government with the opportunity to say how they will end the area of exposure to the Government, passengers and taxpayers caused by unprotected airline seat-only sales, and to consider what a new regulatory framework might look like in the event of insolvency. In so doing, it would also enable the Government to fulfil the Secretary of State’s commitment of 9 October to,

“look at all the options”,

and,

“ensure passengers do not find themselves in this position again”.

The Government have said they are going to consult and look at all the options as part of the process of,

“working through the reforms necessary to ensure passengers do not find themselves in this position again”.

Indeed, the Government said in their 9 October Statement that they would be putting a lot of effort into this,

“in the weeks and months ahead”.

More than two weeks since that Statement, have the Government made official approaches to the industry and consumers with a view to commencing consultation about the sorts of mechanisms beyond ATOL which could be implemented to address the issue and consequences to passengers of future airline insolvency? What will be the timespan of such consultation? Which organisations, companies and bodies do the Government intend to consult, and who from beyond and outside the industry do they also intend to approach? Finally, by when do the Government expect to reach conclusions about the actions and changes they intend to make to deliver on the Secretary of State’s promise following the demise of Monarch airlines that,

“passengers do not find themselves in this position again”?

Presumably that commitment was not made without at least some idea of the possible ways of achieving that particular goal.

We certainly cannot continue with a situation where nobody is sure whether the Government will or will not fly people back home in future at no extra cost in the event of another airline failure, and where there is also an apparent lack of clarity for many passengers and potential passengers under the existing arrangements and ATOL scheme about their rights or lack of rights and their protections or lack of protections. In moving my amendment, I express the hope that the Minister will be able to give some answers to the points and questions I have made and asked in the light of the specific commitments given by the Secretary of State on future objectives and intentions in his Statement of 9 October. I beg to move.

[Baroness Randerson (LD)]

My Lords, I have added my name to this amendment because I felt that it raised some important issues for the Government to look at. I also felt it would be genuinely useful if the views of the Government on the progress made so far were put on record.

At the time of the failure of Monarch Airlines the Minister, in his Statement to the House, emphasised that it was the largest repatriation since D-day. But I put in contrast what the airline industry said in my discussions with it: that Monarch was a small airline and that the problems would arise if a big airline were to fail. Of course, those I spoke to believe that their whole industry is in robust health and that Monarch is definitely not an example of its state generally. The point is that, as the noble Lord, Lord Rosser, has just said, airlines have failed before and undoubtedly, at some point in future, something like this will happen again.

We are looking here at whether the Government have set some kind of precedent by bringing everyone back, for understandable and excellent reasons. I think everyone supports the way that was done and the reasons for doing it. But the point is that if and when it happens again people will expect a similar response and, for that to be possible, there needs to be a scheme. The consumer understands that there is a need for a scheme and understands the ATOL scheme. What the Monarch passengers probably did not understand was why some of them were covered by something and others were not. In the end, the Government need to look at the new ways of working—the new ways in which travel is offered—and present a new scheme which covers them. In the days when the ATOL scheme was devised, package holidays covered a huge percentage of the market. That is very much less the case now.

It is also important to look not just at the passengers who are affected by this. One airline’s failure can often adversely affect a number of package holiday operators. If one airline fails, several package holiday operators will find their business seriously affected. There is a serious knock-on effect within the industry from this and it needs to be addressed. I shall listen to the Minister’s answer with interest.

[The Parliamentary Under-Secretary of State, Department for Transport (Lord Callanan) (Con)]

I thank the noble Lord, Lord Rosser, and the noble Baroness, Lady Randerson, for their contributions and for the constructive way that they have approached the Bill. I am extremely grateful to them and I recognise the purpose of Amendment 1 —to ensure that ATOL protection covers flight-only bookings made through airlines—but the simple fact is that the proposed amendment would not achieve that aim.

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Moved by

[Baroness Randerson]

2: After Clause 2, insert the following new Clause—
“Ensuring transparency of consumer protections
(1) Section 71 of the Civil Aviation Act 1982 (regulation of provision of accommodation in aircraft) is amended as follows. (2) After subsection (1D) insert—“(1E) The Secretary of State must, within the period of 12 months beginning with the day on which the Air Travel Organisers’ Licensing Act 2017 is passed, make regulations to ensure that consumers are informed of their protections when purchasing flights, package holidays and linked travel arrangements.(1F) Such regulations must provide that before the sale of any flight, package holiday or linked travel arrangement is completed, the retailer must make the consumer aware of what protections, if any, apply to their purchase in the event that the retailer, or the provider of the flights or accommodation, ceases trading.(1G) In this section—(a) “retailer” means a provider of flights or overnight accommodation, either directly or as a third party;(b) “protection” means any scheme available to the consumer in the case that the retailer ceases trading;(c) schemes referred to in paragraph (b) may result from the retailer or providers holding a licence under this section, the consumer completing the purchase with a credit card, or any other means that the retailer is aware of.””

[Baroness Randerson]

My Lords, I have taken the opportunity in this amendment to press the Minister further on the information to be supplied to consumers. The key question is how “linked travel arrangements” would work in practice. I believe the EU directive refers to facilitating a purchase and am interested in the definition of how one website might facilitate a purchase of something from another website. For example, is advertising facilitation or does there have to be a closer link? If there does, how does that get translated into information on the screen that is clear to consumers? My interest is in consumers being able to know the difference.

In the last few days I have done a significant amount of research of a very practical nature. I have been on a lot of websites and booked notional holidays aplenty. My inbox is now of course alive with the reaction of the internet to my searches, and I shall definitely regret this research in due time. I have been trying to tie down those offers I receive online to what would be called a linked travel arrangement: flights here being offered possibly with a hotel there, and the two being financially dependent on each other in one way or another, rather than just a chance advert. There are adverts that come into your inbox because Google knows what you are doing. I have gone on to an airline website, and Google knows I have done that, so it sends an advert telling me that there are wonderful offers for hotels or car hire, the usual two options—it might send you an email or it might be an advert that comes at some point on the screen. Rather disconcertingly, you can be looking for a book on a website and suddenly find you are being offered a hotel there that relates to your previous search. It happens to us all the time now. Yesterday I saw, in the middle of flight information on the screen, an advert for a hotel. Clearly, the advert for the flight had been designed to accommodate the hotel. Is that a linked travel arrangement? The point I am making is that if I cannot work it out, I dare say a lot of consumers will not be able to either.

It is essential that consumers are given clear information—in large print, not small. ATOL-protected holidays are admirably and clearly stated to be so. I am seeking from the Minister information on how we might get similar wording for any future designation.

[Lord Spicer (Con)]

What the noble Baroness is saying is very worthy, but is it not a bit academic in the light of the Government’s statement yesterday that five London airports will be completely full up by the 2030s and that there is very little chance of rectifying that, despite some of us warning of this for the last four or five years?

[Baroness Randerson]

The Minister has already referred to the importance of an airport strategy, and the Government are working on that. As the noble Lord states, there is clearly an interrelationship between the availability of flights and the availability of package holidays.

We need clear wording akin to the words used in the ATOL protection. That phrase “ATOL protection” works because over many years the consumer has come to understand what it means, partly through government advertising, partly through the work of consumer groups and, sadly, partly through the hard lesson of the failure of holiday companies. We need similar clear wording for any new scheme, and I fear that “linked travel arrangements” is not a phrase that trips off the tongue or that will be instantly understood by the holiday-buying public.

I turn to an issue that I have raised before: the variation in protection between credit cards, debit cards and PayPal. We might want to pay for a flight by debit card because in many cases, using a credit card costs additional money—a fee for the privilege of using it. However, it is important that at the point where consumers choose how to pay, they are warned that if they pay by debit card they will not get the same protection as if they pay by credit card. It is important that we modernise the system. I am not sure that this Bill is the place to do that, but it is important that the Government take the point away and look at it.

[Lord Rosser]

My Lords, I add our support to the amendment moved by the noble Baroness, Lady Randerson. I do not intend to go through all the points she has so ably made, but I share her view that there seems to be a lack of clarity over the rights and protections—or lack of them—available, as the amendment says, to those,

“purchasing flights, package holidays and linked travel arrangements”.

Certainly, in some adverts, to which the noble Baroness, Lady Randerson, has already referred, the situation is not made clear. So we agree with the objective of the amendment, which is designed to make much clearer for people, when booking flights, package holidays or other travel arrangements, exactly what their rights are and are not, and what protections are and are not available.

[Lord Callanan]

Before I turn to the subject of the noble Baroness’s amendment, which is about information to consumers, let me go through again the business of linked travel arrangements, which I know is causing some confusion—not least to us in the department. As I said to her when we discussed this privately, it was inserted into the directive and a lot of work is going on to work out what it actually is.

The package travel directive has broadened the scope of a package, so it is now clear that protection should apply when customers book customised combinations of travel online. As the noble Baroness outlined in her speech, it is not at all clear what a linked travel arrangement actually is. It is obvious if there is a direct advertisement on a flight website for a linked hotel and that hotel is promoted by the airline directly and is on the same web page. That, it seems to me, is an obvious linked travel arrangement. However, as we know, and as the noble Baroness has discovered in her meticulous research, on the internet, many adverts on webpages have no connection whatsoever with the originator of the webpage. They are placed by advertising companies, principally Google, among others, and the originator of the page has no idea what adverts are appearing on their page. So if you click on an associated advert, that would not necessarily be a linked travel arrangement, but how is the consumer supposed to differentiate between those two things?

Those are the issues we are grappling with at the moment: trying to come up with a definition of a linked travel arrangement and to implement it in regulations. As the noble Baroness said, the directive introduces information provisions to ensure that consumers have a good awareness of the kind of product they are buying, and we are consulting extensively with the industry to try to ensure that that is the case.

Turning to the subject of the amendment, I recognise the purpose of the proposed new clause and the need to ensure that consumers are better informed about consumer protection when they make a booking. This is well-intentioned and entirely in keeping with the Government’s wish that passengers should have a robust level of protection, and that their rights should be communicated to them in a timely and clear way.

However, I do not think that this is the right approach at this time. Let me explain why. First, we need to be mindful that package holidays and linked travel arrangements often do not involve a flight. They could involve a journey by road, rail or sea, so the Civil Aviation Act 1982 is not the most appropriate place for such an obligation. The UK already has regulations in place through the package travel regulations, which cover package holidays across all modes. We are in the process of updating these regulations alongside the Bill to extend them to cover linked travel arrangements, in line with the EU package travel directive.

This brings me to my second point. The new clause would unnecessarily duplicate the new information requirements in the EU package travel directive. The directive has introduced new information provisions which are designed to improve information for consumers. This sets out the specific information that must be provided to consumers about the type of product they are buying and the corresponding level of protection. This must be provided to the consumer both before and after they buy a package or a linked travel arrangement. We have recently completed a consultation on the directive, which proposed that the information provisions will be brought into force in 2018, through changes to the package travel regulations. We are also planning to retain the ATOL certificate alongside these new requirements to help reinforce awareness of consumer protection.

Finally, I fully accept the need to understand the lessons learnt from the Monarch failure, which I outlined earlier to the noble Lord, Lord Rosser, and to respond in the right way. We have to understand the issues that need to be addressed and whether we can make sensible changes to the laws. That is why we are undertaking an internal review, so that we can bring forward solutions that are feasible and have been assessed as being practically enforceable. As the Secretary of State said in his Statement in the other place,

“I do not want us to rush into doing something without doing the ground work properly. We need to look carefully at what has happened, learn the lessons and make any modifications necessary. I assure the House that that is what we will do”.—[Official Report, Commons, 9/10/17; col. 40.]

It is quite possible, of course, that additional information requirements will follow from that review, but it is important that we consider the options and ensure that the steps we take are the right ones and that they both work in the UK and are compatible with EU law.

I therefore believe that an amendment to introduce legislation of this nature—however well-intentioned the noble Baroness is—is premature. So, in summary, if her concern is that the Government are not taking steps to ensure that consumers are informed about consumer protection when they book a trip, I hope she can take comfort that we are ready to make provision through the package travel regulations and the ATOL certificates to do just what she has asked for. In addition, we will of course also consider consumer awareness as we review the lessons learnt from Monarch and, as I said earlier, as we develop our aviation strategy. Therefore, in the light of the assurances I have been able to give her, I hope the noble Baroness will withdraw the amendment.

[Baroness Randerson]

I thank the Minister for his response. I will certainly watch carefully as the Government respond; I am sure that they are working hard on this. My concern is largely with the consumer, but it is also with travel operators, because it is important that they be able to succeed as much as possible. Consumer confidence is an essential part of that. A simple sentence on a website saying that it is a particular type of arrangement is cheap, easy to organise and involves minimal effort for the companies concerned. It is an easy way to provide additional confidence for consumers. Having said that, I am happy to withdraw the amendment.

Amendment 2 withdrawn.