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Civil Aviation Bill

My Lords, that is a tougher nut to crack. We have a considerable way to go on the issue of emissions worldwide and by all airlines. I am seeking to emphasise that we are seeking to develop the European scheme more fully, to include aviation. I hope that my noble friend will recognise that that will be a very significant step forward and will increase the basis on which Europe approaches the issue of worldwide emissions. In addition to the environmental provisions, the Bill also contains two important measures relating to the financial protection and health of air travellers. The Government are committed to improving consumer protection for air travellers. The Bill takes a step forward by ensuring that the Air Travel Trust Fund can be replenished by contributions from the aviation industry. The Government have decided not to make an amendment to the Bill to implement the Civil Aviation Authority’s recommendation for a £1 levy on all air passengers departing the UK. We believe that the attractions of the CAA scheme are outweighed by the disadvantages. First, the levy would be compulsory. In line with other sorts of financial protection, the Government do not believe they should compel citizens to protect themselves against the failure of an airline. Secondly, there is no logical reason why the state should organise refunds for any one particular group of consumers. The ATOL scheme has been in place since the 1970s and, alongside the European directive on package travel, was introduced specifically to protect holidaymakers from the risks involved in paying out significant sums to travel organisers many weeks, if not months, before the date of travel. Thirdly, although the levy would reduce the difference in protection given to package and independent travellers, it would not eliminate it altogether. There would still be a two-tier system as those who assembled their own packages would have cover for their flight but not for loss of accommodation or car hire. The Government appreciate that the package travel regulations impose costs on tour operators, which they see as an unfair competitive advantage for scheduled airlines. However, the CAA-proposed levy would replace that imbalance with another. The same £1 would purchase cover for the traveller who buys a low-cost flight to Europe for under £30 and for the traveller who has booked a two-week package in the Far East or the Caribbean. The budget traveller would pay a much higher percentage of his outlay to ensure that there is enough money in the pot to refund to the long-haul package passenger should his tour operator fail. The Government are committed to reducing regulatory burdens on business and to regulate only where necessary and in a light-touch manner. A levy is a heavy-handed instrument to solve the problem of informing a population that has easy access to a multitude of information sources which are increasing continually Passengers are also said to need special protection if they are stranded abroad. The Government realise that not all travel insurance covers insolvency. However, some insurance does. The CAA’s assessment and the example of EUjet this summer showed that people generally find their way home by other routes. Of course, they may incur some expense and inconvenience, particularly if they are not insured, but it is not fair to impose a levy on all air passengers just to provide cover for that. In the case of EUjet, other airlines stepped in to help and have told the Government that they intend to learn lessons from the experience to improve the effectiveness of future voluntary rescue efforts. Similarly, when Swissair and Sabena failed, other network airlines honoured the homeward tickets of passengers abroad. The Government have been encouraged by airlines’ assurances that they will continue to take voluntary action on repatriation. The Government will be talking further to airlines in the coming weeks to ensure that effective voluntary measures are put in place as rapidly as possible. Nevertheless, we recognise that the current bonding system for tour operators can be a barrier to market entry and can tie up capital. The Government have therefore asked the CAA to review whether the system of ATOL bonds could be replaced with a more efficient means of meeting tour operators’ obligations under the package travel directive, while at the same time replenishing the Air Travel Trust Fund following the passage of the Bill. In 2001, in its excellent study of air travel and health, the Select Committee on Science and Technology of this House recommended that the Government should ensure that concern for passenger and crew health becomes a firm priority. In March 2003, in response to that recommendation, we announced the establishment of the Aviation Health Unit—a dedicated facility within the Civil Aviation Authority for the provision of health advice to passengers, airlines and others. The unit, which has been in operation since December 2003, is presently being funded by the Department for Transport. However, it has been the policy of successive governments that such costs should be borne by the aviation industry rather than the taxpayer. We have therefore included a clause to enable the CAA to recover the cost of the Aviation Health Unit from the industry by a suitable charging scheme. The CAA will of course consult on the most appropriate charging mechanism, but the amount of money involved is extremely small, amounting to less than half a percent of what airlines currently pay towards the cost of the Civil Aviation Authority.