Case study

How GAD analysis helped airline passengers

Advice and analysis on airline insolvency costs.

Passenger on plane

We estimated the cost of providing repatriation to the UK of air passengers who are affected in the event of an airline insolvency. We undertook the work to support a government-commissioned review looking at providing greater consumer protection in the event of airline or travel company failure. GAD’s analysis was based on data drawn from a variety of industry sources. The data included the insolvency risk of major airlines serving the UK, flight data and detailed cost information which set out the cost of flying people back to the UK, if their airline becomes insolvent.

Waiting passenger

Financial options

As part of our analysis we:

  • examined the likely losses that occur when airlines become insolvent
  • assessed the cost of different financial options
  • estimated the distribution of the annual cost of repatriating passengers due to airline insolvencies

Our expert analysis meant we were able to address questions such as ‘how much should I expect to pay to be able to repatriate passengers affected by airline insolvencies?’ and ‘what’s the chance of the cost of repatriation in one year exceeding £10 million, £50 million or £100 million?’.

Repatriation costs

The estimated expected cost produced through our analysis included the cost of existing passenger protections such as the Air Travel Organiser’s Licence (ATOL) Scheme. Our analysis also included estimates of how much this cost would reduce if the ATOL scheme paid for repatriation costs where that cover is in place.

Our analysis provided sound robust support and has helped the review to:

  • propose a new Flight Protection Scheme with a small passenger levy to protect passengers against airline insolvency while abroad
  • reform the UK’s airline insolvency regimes so an airline’s own aeroplanes can be used to repatriate its passengers should it fail
  • plan to improve awareness and take up of safeguards which protect customers with future bookings, when airlines collapse

GAD’s full report is Annex D of the supporting evidence research reports.

Published 24 June 2019