Should airlines provide failure insurance?

Calls for airlines to cover their passengers against failure increased today (November 20), as a leading travel insurance provider joined the debate.

Mondial Assistance urged carriers to provide their customers with failure insurance, in wake of numerous airline collapses this year that have left passengers out of pocket.

Mondial already counts a number of carriers among its clients, including Ryanair which joined the group in 2006, and is calling on others to offer their passengers airline failure insurance.

This form of insurance - which repays the cost of a ticket on a failed carrier, or the cost of getting another ticket on a different airline - has been around since the 1990s - though airlines are not presently obliged to offer a policy.

Mondial Assistance's UK sales director, Ben Smart, believes that it is clear that consumers need "more protection from the risk of airline collapse".

He told Travel Mole: "As the economic downturn continues to put pressure on businesses, it is essential that consumers are covered for potential losses. "It is important that airlines meet the needs of their customers by providing comprehensive cover to suit the demands of today's market."

This year has seen a number of high-profile airlines fold under tough economic pressure - including XL, Zoom, Eos, MAXjet - leaving hundreds of passengers stranded and forced to purchase alternative fares.

As a result of this increased risk of insolvency, the Air Transport Users' Council is urging the government to introduce protection in the event of a scheduled carrier going bust.

In addition, the Association of British Travel Agents (ABTA) is considering demanding that its members offer consumers financial cover on every purchase.

Though it too, has not given up hope lobbying the government for such a decision. Steven Freudmann, board member of the ABTA, said: "We believe there is mileage in lobbying the government, arguing for universal protection for travellers."

Consumers who plan on travelling now can stay protected by booking their flights with a credit card company from an ATOL tour operator, which carries out checks on travel organisations and requires them to make contributions to the Air Travel Trust guarantee scheme.

Alternatively a new site has been developed called www.protectyourholiday.com, which allows travellers to protect themselves at a "nominal cost".

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