Simon Calder: The Man Who Pays His Way

We shouldn't all be made to pay the price of weaker airlines

AIRLINE FAILURES are all too common. This year's was different, though, because the Civil Aviation Authority (CAA) launched an investigation into the effects of EUjet's demise.

When the airline, based at Manston in Kent, stopped flying on 26 July, 12,000 of its passengers were still abroad. A further 27,000 had yet to travel. One in six of those stranded was brought home by easyJet, Monarch and Flybe, each of which launched a rescue package for EUjet passengers. They sold a one-way standby fare back to Britain of just £25, but this applied, naturally, only on the routes they flew. Once back in Blighty, travellers had to find their own way home from Gatwick, Stansted or wherever, since EUjet was the only airline flying to Manston.

Most of the remaining strandees ended up paying from £50 to £200 for a flight home, with the added problem of finding their way back to Kent, where most of them lived. The CAA estimates the average cost of air and ground transport to each passenger was £100 - on top of the fare that they had paid.

A lucky handful, just 130, had booked EUjet flights as part of an Atol-bonded package. Half a dozen of these travellers were abroad at the time and continued their holiday as planned. Those yet to travel received refunds or were provided with alternative flights.

The remaining 99.5 per cent of prospective EUjet passengers were financially flummoxed. Anyone who had not paid by credit card lost the cost of their flights, and faced paying even more than the originals for replacements close to the departure date. Most were reluctant to cancel the trip, because they had booked accommodation and/or car rental at their destination. I deduce from the CAA report that the failure cost holidaymakers about £7m.

One in six of those abroad cut short the holiday to try to arrange the trip home, and a great deal of stress was generated - not least because many of the travellers assumed that they were protected if their airline went bust. Two in five, says the CAA, "mistakenly thought that they were protected by Atol, Abta [the Association of British Travel Agents] or their travel insurance."

"This is an outrage," you may be thinking; "something must be done". The CAA agrees, and has been promoting a scheme to add a £1 levy to the cost of every flight bought in the UK. This would be paid into a fund that would allow customers of a failed airline to be brought home for free, and to give those yet to travel the opportunity to get their money back. In effect, it would offer a form of Atol protection to all air travellers. It's an easy solution, with the backing of Abta. But it's not a plan favoured by the transport secretary, Alistair Darling, nor for what it's worth, me.

THE £1 levy is intellectually flawed. The reason low-cost carriers are able to sell flights cheaply is, you may not be amazed to learn, because they keep their costs low. In contrast with traditional airlines, no-frills carriers cut out everything but the essentials for transporting a passenger safely from A to B (or, on Ryanair, to somewhere a fair way from B).

"You're only buying the flying", as the Virgin Blue slogan goes. And if you are buying some flying on easyJet, Ryanair, Jet2, Monarch or one of many other financially robust airlines, one thing you most definitely do not need is any kind of financial insurance policy. Ryanair has £1.3bn in cash - enough for it to operate for a year with no further money coming in. BA has a debt burden, but there is no chance that the airline will fail in the foreseeable future. So a levy paid by the 100m-plus passengers that these airlines carry each year in no sense represents protection. It would simply be a massive subsidy from them to customers of weaker airlines. And how do you weaken an airline? Well, you could add a non-negotiable £1 per passenger to its costs.

In a thriving aviation market like the UK's, customers are price-sensitive. If a fare is too high, they will switch to a cheaper alternative. And if there isn't one, they will simply not travel, and both they and the airline will lose out.

WE NEED to deal with the causes, not the effects, of airline failures. One of the CAA's duties, quite rightly, is ensuring the financial fitness of airlines. The very body that was promoting an extremely expensive insurance plan, to be paid for by passengers, is the same organisation that is supposed to help ensure airlines do not go bust. It could also do much more, along with tour operators, to promote the indisputable benefits of the package holiday.

Alistair Darling bravely sided with the traveller and rejected the CAA's arguments, thereby winning my nomination as Britain's finest transport secretary of the 21st century so far - though I have to admit it is something of a thin field.