Travellers To Suffer from Goverment's Increase to Flight Insurance Scheme

16th July, 2009

The Department for Transport today annouced that it is due to increase the levy charged by the industry's flight insurance scheme from 1st October 2009. As a result, Holidaysmakers can expect to hit in as the cost looks to be passed from the airlines to their passengers.

The Junior Minister, Paul Clark, told MPs that the charge imposed on airlines by the Air Travel Organisers Licence (ATOL) would increase from £1.50 to £2.50 per passenger (after a consultation by the Civil Aviation Authority (CAA) earlier in the year into whether the increase should be as much as £3.50).

In a statement released by the Department for Transport (DfT), the move is outlined as a measure to fill a black hole in finances following the collapse of XL (the tour operator) in 2008. When XL went under last year, more than 80,000 people were stranded. The eventually cost taken out of the ATOL Protection Contribution (APC) fund was in the region of £20 million (the outstanding cost beyond XL's own £40 million insurance policy limit).

This annoucement has landed at the same time as Virgin Atlantic boss, Sir Richard Branson, launches a campaign against another levy increase - this time to the Air Passenger Duty (APD). He claims that little of the £2 billion currently raised through the APD is going towards green causes as originally intended.

What Does This Mean for UK Traveller?

It seems as though all UK travellers flying from 1st October 2009 will be facing at least a £1.50 hike on their flight costs. The move is sure to hit the popularity of holidays abroad during what are very tough financial times for the UK.

Mr Clark told MPs: "I am aware of the extra burden this will place on travel companies and consumers at difficult times, which is why I have agreed to an increase at the bottom of the range consulted on by the CAA. I believe this strikes the right balance between ensuring the future financial stability of the ATTF while keeping additional burdens on travel companies and consumers as low as practicable."

Although his statement will come as little consolation to the public, travel insurance experts are claiming the best way to reduce the effects of the levy increase is to shop around and find the best travel insurance deals. They see this as the easiest way to reduce the cost of holidaying abroad. Online travel insurance comparison websites are plentiful nowadays and the choice of travel insurance companies is much better than it has been in recent years.

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