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Government Recommends ‘Insolvency Levy’ on Passenger Flights

Written by: Keith Tully

Reviewed: Tuesday 7th May, 2019

Government Recommends ‘Insolvency Levy’ on Passenger FlightsA government review has recommended that a levy of 50 pence per journey be introduced on passenger flights to cover costs if an airline becomes insolvent.

The idea has been put forward in a newly published document that reflects the conclusions of relevant experts who were asked by government to conduct an ‘Airline Insolvency Review’.

Chris Grayling, transport secretary, commissioned the review following the collapse into administration of Monarch Airlines in October 2017, which saw as many as 85,000 people having to be urgently repatriated to the UK by the Civil Aviation Authority (CAA).

Around 98 per cent of people who had flights booked with Monarch prior to its collapse were able to return to the UK on the same day as they were initially scheduled to as a result of the CAA’s actions.

But that all came at a significant cost to the taxpayer and the government is recommending that those costs in future be covered by a levy on passenger flights.

Overall, insolvencies within the airline industry are estimated to have cost UK taxpayers in the region of £40.5 million in recent years.

“Although airline insolvencies are relatively rare, as we have seen in recent months they do happen – and at times have required government to step in to repatriate passengers at great cost to the taxpayer,” said Peter Bucks, who was asked to chair the Airline Insolvency Review.

“We are therefore proposing a comprehensive scheme to protect all UK-originating air passengers, with the associated costs met largely, if not wholly, by the private sector,” he wrote in his foreword to the review.

Mr Bucks makes clear that the creation of any such scheme would add notably to the costs incurred by airlines but that those costs could be covered by adding around 50 pence to the prices paid by customers for individual flights.

“I welcome the report and I am grateful for the work performed by Peter and his team,” said Chris Grayling in a statement responding to the review.

“We will now consider the range of options put forward by the review, and work to swiftly introduce the reforms needed to secure the right balance between strong consumer protection and the interests of taxpayers,” he added.

Keith Tully

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Keith Tully
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Keith has been involved in Business Rescue since 1992, during which time he’s worked for both independent and national firms. His specialties include company restructuring matters and negotiating with HMRC on his clients behalf.

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