Air Travel Organisers’ Licensing

Debate between Mark Lazarowicz and Louise Ellman

Thursday 22nd November 2012 Westminster Hall

[Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Williams. I am pleased to present two Transport Committee reports for debate. Both are on aviation, and although they deal with complicated matters, they are vital to the public. The first debate is on the reform of Air Travel Organisers’ Licensing, or ATOL.

[Mark Lazarowicz]

Before my hon. Friend proceeds, does she agree that, although we are discussing the first report, it is particularly important that we have a Minister here to hear what is said about the second report? Important negotiations are going on in Europe about flight times, and many of us have constituents working in the industry who have contacted us about the matter. It would be amazing if we did not have the opportunity for a Government response on this important topic.

[Mrs Ellman]

I agree with my hon. Friend. I certainly wish Ministers to listen to what I have to say, and I have numerous questions to pose to them, but the proceedings have started, so I must continue. I hope that the Minister will arrive before I have proceeded much further.

The ATOL scheme was introduced in the 1970s, a decade in which there was a dramatic increase in the number of people travelling abroad on package holidays. ATOL is a Government-backed insurance scheme that protects holidaymakers flying abroad from the effects if travel firms go bankrupt. Holidaymakers can be reimbursed for the cost of holidays and repatriated where necessary. Over the past three years, 250,000 people have received refunds as part of the scheme and 100,000 have been repatriated.

Firms covered by the ATOL scheme charge each passenger £2.50 to cover the cost of ATOL. However, at the time of our inquiry, the Air Travel Trust Fund from which payments are drawn was in deficit to the tune of £42 million. That deficit is now decreasing. I would be grateful if the Minister could tell us the latest figure, as it is important to have. The deficit is falling because the charge per passenger was recently increased from £1 to £2.50, but the scheme remains controversial. Currently, only about half of holiday bookings are covered, an issue at the heart of ATOL reform.

The situation is complicated. Traditional package holidays sold by travel agents and tour operators are covered by ATOL. Holidays sold by agents or firms defined as acting as agents for the consumer, particularly online, are not. Firms selling holidays not covered by the scheme have a competitive advantage, because they do not have to charge for ATOL cover. However, it is not clear whether consumers are aware of that difference. There is also the problem of who pays for repatriating travellers stranded abroad by the bankruptcy of an airline or agent not covered by the scheme.

The Government are in the process of changing ATOL. Two reforms have already been made. First, “flight-plus” holidays—in which a flight plus another part of the holiday, such as a hotel booking or car hire, is bought within a 48-hour window—sold by existing ATOL operators are now covered. Secondly, customers buying holiday packages covered by ATOL must now be issued with a certificate telling them that that is the case. Those two changes are an advance.

The extension of ATOL to certain flight-plus holidays is estimated to bring some 6 million additional holidays into the scheme, ensuring that 60% of holidaymakers are covered. The extra revenue brought into the scheme by those extra travellers should help reduce the charge per passenger, but operators have challenged the Government’s figures, claiming that the travel industry will find ways around the new regulations.

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[Mrs Ellman]

My hon. Friend’s comments reflect views that the Committee has heard over a long period—we have been looking at the issue for a number of years. Particularly when people are stranded on holiday and have problems, we realise that those consumers simply did not know what they were covered for or indeed whether they were covered. That has to be a key issue for the Government. They have partially addressed it, but I will say later how I think that that is proceeding.

The Government were well placed to overcome the problem of that relative lack of formal reaction from consumers and consumer groups by commissioning their own research into whether consumers understood the concept of ATOL cover and whether they wanted it to apply to packages that they assemble themselves online. We must remember the changing nature of the way in which people organise their holidays, because individual consumers organising their own holidays and assembling packages online is a growing trend, so it is important for us to know what consumer views are and about the type of insurance that they think most appropriate. Up until now, however, the Government have not done that. The extension of the scheme has not been based on explicit consumer research, and I want the Minister to tell us why the Government did not do more to find out specifically what consumers want.

The Committee welcomed the introduction of the ATOL certificate, which will increase clarity for consumers about their cover. We have found a consistent issue over the years to be that passengers and holidaymakers simply do not know what they are covered for. There is a risk, however, that consumers who buy holidays that are not ATOL protected will not realise that. Owing to the Government’s positive action, the people who are now ATOL protected will know that they are covered, but the ones who are not covered will not know, because they will not have a certificate. Do the people without a certificate realise that that means they are not covered by ATOL? We simply do not know.

More could be done to inform consumers not covered by scheme of their position and options. The Government agreed to consider our suggestion, perhaps by introducing a voluntary scheme for airlines to inform customers of their protection—or lack of it—when buying a flight. Can the Minister tell me what progress has been made in taking that suggestion forward?

[Mark Lazarowicz]

That is important because, as my hon. Friend said, normal people make their holiday arrangements, effectively, by putting together their own packages, which raises the issue of what cover there should be in the event of an airline-only arrangement falling through if the airline goes out of business. There are clear difficulties with doing something at UK level only, as well as issues of practicality, but the report highlights the importance of voluntary agreements and discussion in the industry up to a European level. Does she think as I do, it important for the Government to be able to show that they are actively pursuing the possibility at European level? That is another point to which the Minister needs to respond when we reach the appropriate point in the proceedings.

[Mrs Ellman]

I agree with my hon. Friend that the matter needs to be pursued in the European arena, because the nature of air travel is such that it is likely to involve travel outside this country. We need to know from the Minister exactly what is happening and what progress, if any, has been made.

As my hon. Friend the Member for Poplar and Limehouse (Jim Fitzpatrick) mentioned, the Civil Aviation Bill includes clauses that will make more fundamental change possible. Such changes will be implemented, we are told, at a future date. Will the Minister say what the timetable for that implementation is? As my hon. Friend said, there was a debate on the subject yesterday, and amendments to the Bill were discussed, but we need to know the timetable so that we can monitor progress. During the Select Committee inquiry, the then Minister was asked how the Civil Aviation Bill would affect holiday insurance cover, and it was clear that there would be major changes. We need to know the detail of such changes, as well as the timetable for implementation of the Bill.

In future, packages sold by airlines and by those designated as agents for the consumer, will be included in ATOL. The Committee supports that change, because it is an anomaly that a holiday package sold by a travel agent has ATOL protection while the same package sold online by a firm operating as an agent for the consumer—for which there is a specific definition—is not covered. That is extremely confusing for the consumer, and one reason for the reform is to provide greater clarity for the consumer, as well as more comprehensive cover, and to create a more even playing field in the industry. When we conducted our inquiry, we spoke to a range of people, including those from the travel industry and its different sectors. One point made forcefully to us was that different parts of the industry would be affected in different ways, and a strong view from some was that there should be an even playing field for the travel industry itself. The Government are addressing that situation, but we need to know how the proposals will change it. We need to know what progress has been made on providing appropriate cover, clarity and even-handedness for the consumer, and on creating a more equal playing field in the travel sector.

There have been calls for the Government to go further than they propose and to bring all international flights within ATOL, providing passengers with protection from airline insolvency. In our inquiry, we found different views in different parts of the travel sector. ABTA, the Association of British Travel Agents, has argued strongly for that, pointing out that tour operators often fail because airlines have run into financial difficulties. On the whole, the airlines oppose such calls, arguing that there is a significant difference between a holiday package and a flight. They suspect that the change would mean their being asked to bail out the air travel trust fund, which, they argue, has been emptied because of what they allege to be badly managed tour operators going bust. Those were the points made to us in our inquiry, although we did not get a unanimous view from those who came to speak to us.

On balance, it would be helpful to see international flights covered by ATOL. The additional cost per ticket would be small, consumers could be confident of repatriation in the event of an airline becoming insolvent, and the scope for operators to find loopholes in the ATOL rules would be reduced; quite a number of the witnesses to our inquiry felt that if a scheme for partial cover was proposed, part of the industry would find loopholes to get around the new regulations. The European Commission is looking hard at the question, and my hon. Friend the Member for Edinburgh North and Leith was right about the importance of looking at the issue across Europe. When a decision is taken in Europe, it is not taken just by another body with no reference to the United Kingdom Government. There is a process, and the Government and specifically the Department for Transport in this instance have a way of influencing what happens, and should advocate what they believe is best for our travel industry. Will the Minister update us on what is being discussed at European Union level, and on the Government’s view on the matter? It is important to know what the Government, through the Department for Transport or any other appropriate part of Government, are doing to pursue what they believe is the right way to proceed on travel insurance, and getting the best deal for British consumers.

[Mark Lazarowicz]

That is particularly important because in the few instances of airlines going out of business in recent years, most have been pretty small, and passengers have been picked up by other, larger airlines. However, low-cost budget airlines are now operating throughout the European Union, and many are based in other countries where a UK operator might not feel inclined to offer a replacement flight if it had no connection with the UK. Is that not an important reason for addressing the matter at European level, and why the Government must show that they are actively pursuing the issue to try to get an appropriate solution for consumers?

[Mrs Ellman]

My hon. Friend makes an important point. One issue raised during our inquiry was that the European travel package regulations are being renegotiated, which may take some time. That makes it particularly important that our Government, through the Department for Transport or whatever part of the Government is thought to be correct, advocate during the long-drawn-out discussions on that package, what is correct for UK consumers. It is an ongoing process, and it would be helpful to know what the Department is pursuing in this area at European level, what stage those discussions have reached, and how it will be involved as they proceed and before the extensive European travel package regulations are finalised.

The charge of £2.50 per passenger to pay for ATOL is unfair, because it is not linked to the value of the holiday booking or any assessment of risk. Someone booking a cheap package deal with an established operator pays the same for protection as someone buying a luxury trip to a far-flung country with a niche provider. That is unfair, and the situation would be even worse if flight-only bookings were included, because the ATOL charge could be a high proportion of the cost of a cheap flight. The Government have agreed to re-evaluate the level and the basis of the charge. Will the Minister say what progress is being made with the review?

On the long-term options for ATOL, we considered whether it should be scrapped altogether and replaced with private insurance. We concluded that that was not possible. Few insurance policies are available to provide the same level of protection, and the Government cannot avoid their responsibility swiftly to repatriate people stranded abroad because a travel firm has failed. The EU package travel directive requires the UK to provide a financial protection scheme for holidaymakers.

Nevertheless, there is scope for further reform, particularly when the scheme’s deficit has been cleared. In the Committee’s view, a reformed scheme must distinguish clearly between financial protection for consumers, which might sometimes be covered by private insurance, and repatriation, which is unavoidably an issue for the Government. The scheme should be industry funded, not reliant on Government guarantees as at present, and perhaps it should be managed by the industry. Consumers should have a greater say in deciding what is covered, and there should be more research on what consumers want. There must be more clarity and more public information, so that consumers are clear about when they are covered and when they are not. The Committee would like the cost per booking to come down, and be proportionate to the price of the package. If that were done, much of the controversy about the scheme might fade away.

In recent years, the internet has enabled some people to bypass travel agents and tour operators, and to put together their own package holidays. The ATOL scheme has not kept pace with that development. It has run into financial difficulties, and there is now confusion about who is covered by the scheme and who is not. The Committee welcomes the Government’s steps for reform, but there is much more to be done. I look forward to hearing about further proposals for change.

The nature of the leisure industry and holiday bookings has changed. Travel protection needs to reflect those changes and consumers’ needs. The Department has started to address that, but a great deal more needs to be done, and I look forward to hearing from the Minister what steps are being taken, and what the Government’s plans are.

Civil Aviation Bill

Debate between Mark Lazarowicz and Louise Ellman

Wednesday 25th April 2012 Commons Chamber

[Mrs Ellman]

I thank my hon. Friend for drawing attention to some important points. I agree that the matter needs further thought, and I hope that the Minister can respond on it.

The Select Committee’s work also drew attention to some problem areas in the allocation of responsibility for looking after passenger experiences. Key passenger concerns, particularly about passport and immigration issues, the time it takes people to get into the country and baggage handling, are not necessarily the responsibility of the airports, but they are, in reality, seen as responsible for them. We have heard examples recently of long queues, which are the responsibility of the UK Border Force, yet happen in the airport and are part of the air passenger’s experience. There do not seem to be any means of addressing that dual responsibility in the Bill, and that needs attention.

My hon. Friend the Member for Poplar and Limehouse (Jim Fitzpatrick) referred to the Select Committee’s earlier work on the implications of bad passenger experiences and the need for passenger welfare plans. The problems that air passengers experience at times of disruption during otherwise fairly normal periods are a long-running issue, and there has also been the near-breakdown of the service in situations such as very bad weather. We produced a report drawing attention to the matter and Ministers told us, or certainly implied, that the new licence conditions could contain requirements for passenger welfare plans to be put into practice, so that there would be clear responsibility for looking after passengers and giving them information in times of severe disruption. That does not seem to be happening in the Bill.

I know that the Civil Aviation Authority, in laying down what I think it calls its indicative licence conditions, has said that passenger welfare issues are part of the licensing process. However, it is extremely unclear whether the conditions will be enforceable, how clear they will be and whether there is to be a further consultation period before any such conditions are laid down. That is another area of concern.

All the points that I have made relate to the amendments, and I will be interested to hear the Minister’s response. The experience of passengers travelling by air is extremely important, and it is time that it became a focus of our attention.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

I wish to make a few comments, mainly about Edinburgh airport, which is obviously of particular interest to the residents of my constituency and has recently been purchased by a new operator following the earlier competition decisions. It has been taken over by the operator of Gatwick and London City airports among others.

By and large, the passenger experience at Edinburgh airport is good. Most of the time, people can move fairly smoothly through the airport. Nevertheless, the points that my hon. Friend the Member for Liverpool, Riverside (Mrs Ellman) made apply at certain times of the day. My constituents frequently enter the UK at Heathrow or other airports in the south and then travel up to Edinburgh, and I know from personal experience about difficulties such as long queues at immigration and at security. Sometimes only one or two search points seem to be open even though eight or nine are available. We all experience that, and if the Bill can make the situation better, I will certainly welcome it.

Such problems are not generally the experience at Edinburgh airport, but two aspects of passenger welfare standards need to be addressed there and elsewhere. The first is the issue of international flights in particular arriving late in the evening, when either the UKBA facility or the airport handling facility is apparently unable to cope with arrivals, particularly if planes are slightly delayed. As a result, I have had many complaints about people having had to wait for long periods before they could get off the plane or get past a locked door into the terminal building. I hope that the Bill will lead to an improved service for passengers, both in general and through the new standards that it will bring into effect.

Gaza

Debate between Mark Lazarowicz and Louise Ellman

Tuesday 15th June 2010 Westminster Hall

[Mrs Ellman]

The detail of what happened on the ship will come from the inquiries, but the information that I have brought to this debate—I think very damning condemnation of what happened—does not come from Israeli sources. It comes from the Turkish media and what has been shown on Hamas TV. Those facts might be very inconvenient for people who do not want to know about them, but they are there and they are part of the picture.

[Mark Lazarowicz]

I understand the strength of feeling of my hon. Friend and her view on the issue, but does she agree that the differing accounts that are being given are themselves a good reason why the inquiry into the incident should be seen as genuinely independent and international, and as having credibility on all sides? Will she at least agree that that would perhaps provide some way forward from that unhappy incident?

[Mrs Ellman]

There are indeed differing accounts of what happened, and that is to be expected in an exceedingly fraught and tragic situation such as the one that occurred. That is why I agree that it is important that inquiries should take place; but it is not possible to ignore the facts that I have stated: what happened on that flotilla, what was involved in its planning, the statements that have been made on the TV, the information that has been in the Turkish media, and the context in which Gaza is run, by an organisation with a charter that is simply genocidal.

There is a way forward. The statements made by Tony Blair, the middle east envoy, point a way forward to dealing with the issue of the crossings, but more than that must be done. The most constructive thing would be for Hamas to review its situation, withdraw its charter and state its agreement to accepting the existence of the state of Israel, and join Fatah in negotiations to secure a two-state solution to this tragic problem.

To pick up a comment from one of my hon. Friends about going to Gaza, I have been there—a long time ago, in 1967, just after the six-day war. That was certainly not a golden age for the people of Gaza, which had at that time been administered by Egypt under the armistice agreements of 1949. The people of Gaza were deeply distressed and dissatisfied with the rule of Egypt. They were in poverty and distress. After that war it was hoped that there might be a negotiated solution to the whole conflict, but the Khartoum conference, where the Arab states said clearly “No recognition, no negotiation, no peace” put an end to that. I hope that, whatever our different perspectives on why we are in the current position, we can all make a new start and there can be a negotiated peace on the basis of two states living together in peace and security.