By Neil Lancefield, Press Association Transport Correspondent
A levy of up to 50p per ticket should be added to air fares to create a repatriation fund, according to a Government-commissioned review.
The money would be used to cover the cost of bringing UK passengers home when an airline goes bust.
But British Airways’ parent company, IAG, said airline passengers “should not be charged a levy to bail out other carriers”.
The Airline Insolvency Review was launched following the collapse of Monarch in October 2017, which saw the Civil Aviation Authority (CAA) rescue 85,000 passengers at a cost to the public purse of £40.5 million.
When an airline goes out of business, passengers whose trips are not protected by the Atol scheme normally have to fend for themselves and seek refunds from credit or debit card firms or through travel insurance policies.
But in the case of Monarch, the Government stepped in because there were too few spare seats on other airlines.
The review also recommended that the UK’s airline insolvency regimes should be reformed to allow an airline’s own aircraft to be used to repatriate passengers if it fails.
Airline Insolvency Review chairman Peter Bucks said: “Ensuring all passengers can get home requires organisation, funding and, in many cases, more than simply rebooking on to other flights.
“I hope that the work of the review will – while there is no silver bullet – act as a catalyst to ensure that both passengers and taxpayers are appropriately safeguarded when airlines collapse in the future.”
Transport Secretary Chris Grayling said the Department for Transport will consider the recommendations of the review and will “swiftly introduce the reforms needed to secure the right balance between strong consumer protection and the interests of taxpayers”.
Tim Alderslade, chief executive of Airlines UK, an industry association representing 13 UK-registered carriers, said: “Airlines face rising costs and this is not the time to make it more expensive to travel.
“Fifty pence may not sound much but airlines operate on wafer-thin margins and passengers already pay over £3 billion each year to the Treasury in Air Passenger Duty.
“The chances of booking with an airline that goes bust remain extremely small. When it’s happened, airlines have demonstrated their commitment to bringing passengers home through voluntary rescue fares which worked extremely well and without any taxpayer liability.”