UK Government rejects £1 airfare levy

The British government has rejected a proposal for a £1 levy on airline tickets to build a fund to protect passengers who become victims of airlines that go bust. Aviation minister Karen Buck said the attractions of the scheme were outweighed by disadvantages. The Civil Aviation Authority (CAA) had proposed the levy as a solution to a problem that was highlighted recently by the failure of small budget airline EuJet which ceased trading with thousands of customers stranded overseas. EUJet went into administration in July after less than a year of operation. About 5,000 people were left to find their own return flights. Only passengers who had booked using a British credit card stood any chance of a refund. Normal consumer travel insurance does not cover airlines going out of business, and clients with future bookings are unlikely to get compensation. Under British consumer protection law dating from the 1970s, tour operators offering flights and accommodation in a package deal are obliged to lodge funds to protect their customers against a supplier going bust, as a condition of their operating license. But the law does not apply to airlines or flight only bookings. With more and more people making their own reservations direct with airlines the law on consumer protection has come to be seen as out of date. The levy was opposed by the biggest British budget airline, easyJet, which said a £1 surcharge on all passengers was exorbitant and would cost £250 million in the first two years.

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