My Lords, I thank the Minister for his explanation of the purpose and content of the Bill, which we support, although that does not mean that we will have no issues to pursue during the further stages of the Bill. I am not quite sure whether the numerical shortage of Back-Bench speakers is despite or because of who the Front-Bench speakers are.
In a situation where those booking holidays do so many weeks or even months in advance, and often do so by paying up front in a situation where services are frequently provided by third parties, to ensure up-to-date and effective appropriate protection for airline passengers in the event of the bankruptcy of their travel company is an objective with which I am sure all agree.
Indeed, in the light of the problems there have been at times this year at some of our airports as a result of difficulties over, for example, IT systems and the enormous adverse impact that that can have on passengers, one is tempted to feel that maybe the protection offered by statute is not as all-embracing as it might be. The consumer, we are led to believe, is king. I am not sure that air travellers always feel that that is the case.
In his letter to Members of this House in July, the Minister states that this Bill is intended to modernise the Air Travel Organisers’ Licensing consumer protection scheme for package holidays that include a flight. The ATOL scheme was introduced in the 1970s for UK holidaymakers flying overseas and, as the Minister said, was most recently updated in 2012. The ATOL scheme is also a crucial means by which UK businesses can meet their obligations to have insolvency protection under EU directives.
As the noble Baroness, Lady Randerson, said, the content of this Bill originally formed part of the Vehicle Technology and Aviation Bill, which met a sticky end as a result of the Prime Minister’s sudden desire to hold a snap election. Perhaps the Minister can tell us whether, and when, all the other parts of the Vehicle Technology and Aviation Bill are likely to reappear and whether the impact of drones and laser beams on the safety of aircraft will also then be addressed.
ATOL is a statutory financial protection scheme managed by the Civil Aviation Authority on behalf of the Government and at present applies only to flights with accommodation sold in the United Kingdom. Businesses selling air holiday packages, or flight-only sales by third parties, in the UK are required by law to hold an ATOL licence. Should an ATOL-licensed firm become insolvent, the Civil Aviation Authority can refund protected customers or, if they are already on holiday, ensure that they can get back home. As has already been said, the scheme is funded by contributions made by travel companies into the Air Travel Trust Fund at the rate of £2.50 for each person they book on a holiday. It has been estimated that the ATOL scheme protects over 20 million holidaymakers each year.
As we know, in November 2015 the European Union adopted a revised directive on package travel and linked travel arrangements, and member states—which, contrary to the belief of some, still include us—have until 1 January 2018 to implement the directive, which will apply from 1 July 2018. The Government supported the updating of the EU package travel directive as it was consistent with our own ATOL protections and should provide a consistent approach to protection, including in respect of holidays booked online.
The revised directive takes account of the major changes that have occurred over the last 20 years or so in the way that holidays are bought and sold with the growth of the internet and mobile phone technology. In particular, the internet has enabled people to mix and match the components of their holiday in a way that often falls outside the scope of ATOL and the current EU directive. One survey has estimated that about 75% of UK customers now book their holidays over the internet. This has led to a fall in ATOL sales as a share of all leisure flights from over 90% in 1998 to, I believe, around 50% more recently.
One aim of the 2015 EU directive is to bring greater clarity on what constitutes a package holiday, with a further objective being to harmonise protection within the EU. The first clause of the Bill updates ATOL to ensure that it is harmonised with the recent EU directive. Many of the changes will be covered in regulations, but a wider range of operators, including more dynamic package providers which offer a greater choice of destinations, activities and providers and enable people to tailor bespoke packages for themselves, will probably be covered under the changes, bringing protection to many more UK holidaymakers not covered under the existing ATOL provisions.
In addition, the requirement for travel companies to be in line with standards at “place of establishment” instead of at “place of sale” will mean that UK companies can sell more easily across Europe by simply adhering to the widely respected ATOL arrangements and requirements. Existing ATOL legislation applies only when the first leg of a relevant flight booking departs from a UK airport. However, will the Minister say whether this change will also mean that EU-based companies selling in the UK will have to adhere only to an ATOL-equivalent protection laid down in the member state where the business is based, which could have processes and timescales for recompense distinctly different from what many UK consumers would expect under our ATOL arrangements? Some 500,000 passengers could be affected.
The second clause relates to the Air Travel Trust, the legal vehicle used to hold the money to refund consumers under ATOL, giving the Secretary of State power to define separate trust arrangements to reflect different market models. This change is not directly relevant to the EU regulation addressed in the first clause, but is a dormant power that would enable the Government to make wholesale change to the structure and applicability of the ATOL brand, subject only to the affirmative resolution. Will the Minister say what consultation—and with whom—will take place prior to the regulations under this clause being laid by the
Secretary of State, and will a full impact assessment be undertaken? What separate trust arrangements to reflect different market models are the Government contemplating under Clause 2, and why, and will they provide more, less or the same protection as is provided to consumers under the present trust arrangements?
The third clause extends the scope of the powers under which the Civil Aviation Authority is currently able to request information. Specifically, the clause would ensure that the information power would apply to any airlines established in the UK selling relevant holidays in the EEA that are not covered by the Civil Aviation Act 1982.
The last clause, Clause 4, provides for commencement of the provisions of the Bill, with Clause 3 coming into force on whatever day or days the Secretary of State decides by regulations, and the other provisions coming into force on the day on which the Bill receives Royal Assent. The comment has already been made that the travel industry is one that has to plan, and to sell holidays, up to 18 months or more ahead. Much of the detail implementing the Bill will be done through secondary legislation, the content of which at the moment is unclear. What discussions—and with whom—have taken place and are taking place on the detail of the secondary legislation and when is it expected that secondary legislation will appear, assuming that this Bill becomes an Act?
Further, what guarantees can the Government provide that departure from the EU will not result in any of the existing rights and protections for passengers provided for in EU law, including those provided for in this Bill, being weakened or diminished? Finally, what guarantees can the Government offer the airline industry on the operating environment situation following our withdrawal from the EU, bearing in mind that aviation does not even have World Trade Organization rules to fall back on?
We support the aims and objectives of the Bill, but there are a number of points on which more detail is needed from the Government. The purpose of the Bill will be somewhat diminished if our aviation industry is in trouble following withdrawal from the European Union.
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