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Airline Insolvency Review workshop

This was the fourth Airline Insolvency Review workshop and focussed on the commercial financing options available for the repatriation of passengers when they become stranded due to the collapse of the airline they had booked their travel. 

The workshop, which was formatted around two main discussion topics, was chaired by Peter Bucks, Chairman of the Airline Insolvency Review and was attended by various stakeholders from the both aviation and financial sectors.

The discussion topics concerned the repatriation of passengers and the available financial options to undertake such an exercise and the options appraisal including the opportunities and barriers.  Regarding paying for the repatriation of passengers, such an objective can be split between two options, either funded or unfunded.  The funded method could involve regulatory-based options including/passenger levy, airline levy or a government funded approach.  For the unfunded of market-based options, the workshop discussed airline surety and insurance or even the need for a mandatory passenger insurance which would cover passengers in the event of their airline becoming insolvent.

It was agreed that the insurance option would be challenging for the smaller operators as it may impose an unnecessary and inaccurate higher levy than for the larger operators that ‘appear’ to be in a more financially stable position due their size and network etc.  Additionally, concerns were expressed over how to realistically enforce a mandatory passenger tax, especially if it involved the necessary documents to be checked either during check-in or at the boarding gate.  The workshop suggested that a passenger levy, for example €1.00 per ticket, may be a viable option as a) passengers would not be too concerned at paying such a small additional sum of money and b) the funds collected per ticket could be centralised and utilised in the event of a future airline insolvency/passenger repatriation issue.

To summarise, there was a great deal of open and productive discussion amongst all the delegates, with the findings and options to be forward to the UK Department of Transport for further analysis.  A follow-up workshop will be planned in due course during 2019.

For further information regarding the UK Airline Insolvency Review, please contact the ERA Policy & Technical team.