The Civil Aviation Authority has questions to answer over the way it handled the negotiations surrounding the renewal of Monarch’s Atol, according to delegates at Abta’s Travel Convention.
The airline this morning announced it had agreed £165 million of investment from 90% shareholder Greybull Capital securing its future and the renewing of its Atol licence following a 12-day temporary extension.
Travel industry delegates at Abta’s Travel Convention this week were delighted at the news but said there now needs to be a serious look at the role the industry regulator played during the negotiation.
Publicity about a shadow flying programme organised by the CAA for a reported £10 million in case Monarch failed saw the airline hit the headlines at a crucial time and potentially undermined confidence in the carrier.
Some partners are understood to have put Monarch on stop sale as a result of the publicity which raised questions about the future of the airline amid claims it was going bust, despite being on track to make a £40 million profit this year.
George Michalis, chief executive of Olympic Holidays, said: “I’m very pleased. It’s great news. They deserve it. They [Monarch] have worked very hard and done a brilliant job. It’s good news for the industry as a whole.”
However, Michalis accused the CAA of overreacting by positioning aircraft in Monarch destinations so passengers could be repatriated if the airline failed and called for an official review of what went on.
“There should be an official review into how it was handled. Putting aircraft in when there were negotiations happening exposed them. Something like that can kill a company. I think they [the CAA] overreacted. We were taking hundreds of calls from clients. I can’t imagine how hard it was for Monarch.”
Vertical Group founder Peter Healey echoed Michalis’s views and also descried news of the investment as “great for the industry”.
“For the industry as a whole had Monarch gone it would have been one more real morale blow. Monarch had no idea about the repatriation flights until plane spotters started reporting it. How terrifying for them as a business.
“I understand what the CAA’s role is but they do need to be asked some serious questions about how this was handled.”
Healey said the challenge for Monarch now as to cope with the weakening pound that is bound to see prices increase at least in the short term. “They have got to get new aircraft,” he said. “They have some really good slots, good flight times but they need to be more on an even keel with their competitors.”
Richard Downs, chief executive of Iglu and an Abta board member, said: “It’s fantastic news for the whole industry. I think it beholds the industry to look at the process when companies are going through critical times, how much they are forced to play that out in public. It can actually effect the outcome.”
“The CAA are a key stakeholder in the industry and like any business they should review their processes.”
Downs suggested the current twice annual Atol renewal process could go to four times a year to ease the pressure on the CAA due to the sheer volume of firms renewing their licences at the same time.
“People make different decisions under time pressure. The CAA has a responsibility to saw this is what we did and there are reasons for it, we are happy to discuss it.”
Abta chief executive Mark Tanzer said he was “delighted to hear of the successful refinancing of a major Abta member”.
Miles Morgan, owner of Miles Morgan Travel, said Monarch now had to establish where it stood in the market when it faces increased low cost competition from Jet2.com through its lower cost base and established leisure giants such as Tui.
“This is just the beginning rather than the end,” he said after the CAA agreed to a one year renewal of Monarch’s Atol licences.
“One thing it doesn’t change is the question over what is Monarch’s position in the market,” he said. “The middle ground is always a tough place to be.”
He declined to criticise the CAA’s actions in chartering aircraft to be available to repatriate holidaymakers from European resorts prior to negotiations over the Monarch rescue package.
“The CAA has to do the right thing to ensure customers are protected,” he said.
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