An interim report from the UK’s Airline Insolvency Review has revealed that airline collapse could affect as many as 900,000 air travellers by the 2030s, compared to the 500,000 affected today.
The Airline Insolvency Review was formed by the UK’s Department for Transport after the collapse of Monarch Airlines in October last year to look into what can be done in the event of airline insolvency.
At the time of the collapse of Monarch, around 110,000 British passengers were abroad and the government had to spend £60m bringing them back.
The report was prepared following an assessment of insolvency risk of the top 17 UK airlines that account for over 80% of the UK’s air passengers.
It was found that the average risk of any one insolvency is nearly 25% in any one year.
According to the report, the increase in affected passengers is driven by a growth in passenger demand and increasing insolvency risk faced by airlines.
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By GlobalDataAirline Insolvency Review chair Peter Bucks said: “Air travel clearly brings huge benefits, connecting people from all over the world, but when an airline goes out of business, it can affect large numbers of people who can often look to their government and the taxpayer to assist them in their hour of need. Too many do not have protection of their own, too often requiring the taxpayer to step in.
“Even though airline insolvencies are relatively rare, we need to be prepared to deal with the consequences for passengers when one occurs.
“Ensuring all passengers can get home requires organisation, funding and in many cases more than simply rebooking onto other flights.”
The interim report has also cited the example of Germany’s Air Berlin, which collapsed at the same time as Monarch and received immediate financial support from the German Government to keep it running temporarily.
It also said that that there is no one-size-fits-all solution to repatriating passengers after an airline failure.
The report also found that the most effective option is to keep the fleet of an insolvent airline flying in the event of an airline failure.
