News: flight insurance rip-off; car hire headache

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Flight insurance rip-off

Flight insurance rip-off

Some travel agents are making profits of up to 400 per cent on the insurance designed to protect customers against airline collapses. The Independent has discovered that some agents are charging £5 for Scheduled Airline Failure Insurance (SAFI), which costs them as little as £1.

Travellers who buy flight tickets can be at risk if the airline they book with goes bust. Travel agents selling scheduled air tickets usually either give a binding undertaking that the company has made arrangements to protect passengers' money in the event of scheduled airline failure (Trailfinders, the UK's largest independent travel company, makes this assurance) or they provide, at the passenger's expense, scheduled airline failure insurance (SAFI). A "nominal" charge is made for the premium for this protection.

With many airlines in dire financial straits, and Government action to address the issue some way off, the need for SAFI is clear. But some companies appear to be overcharging for it. Jeffrey Klipp of Marcus Hearn, a major provider of SAFI to the UK travel industry, said that his company stipulates that the agency or tour operator must not charge more than double the cost. He said that even after adding in Insurance Premium Tax (IPT) he would not expect to see his clients charging customers much more than £2 for SAFI. But many of the leading travel companies who use the SAFI option charge a minimum of £5 per person for it.

A spokesman for Travelbag, part of the e-bookers group, said: "Our clients are protected through a corporate insurance policy. The £5 fee is not profit for Travelbag but goes into a pot to cover Travelbag's administration expenses in the case of having to cancel, re-book or refund in the case of scheduled airline failure."

* Bizarrely, most SAFI schemes will not cover travel with the airlines that are likeliest to go bust. Many policies exclude airlines that are, at the time of booking, in (or have requested) a form of "creditor protection" such as the US scheme, chapter 11. United, the world's second-largest airline, is currently in chapter 11.

If you are booking a ticket on such an airline, the agency you are booking with may have constructed an alternative failure protection scheme; failing that, the agent should make it clear to you that you are not financially protected against that airline going bust.

Car hire headache

Next month, eight nations in Eastern Europe will join the EU. But travellers aiming for the Eastern bloc will still find it difficult, expensive or, in some cases, impossible to find a suitable hire car.

As the rules stand, rented vehicles generally cannot be driven from western Europe into the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia. Rental companies cite "business reasons" or "fleet control purposes" - code for concerns over vehicle theft.

Cars rented in Germany, Austria and Italy are allowed to be taken across the former Iron Curtain only if they are not "luxury" vehicles such as Mercedes.

The obvious starting place for a road trip to Eastern Europe is Austria, easily reached from Britain on a range of cheap flights. Crossing the eastern frontiers is permitted, but an extra charge is levied. When driving from Vienna to the Czech Republic, Hungary, Slovakia and Slovenia, Hertz adds 50 per cent to its Collision Damage Waiver and Theft Protection fees. Avis charges €14-17 (£10-12) per day, while Europcar levies a one-off charge of €35 (£25).

While the car rental world maintains a level of regulation that the EC would be proud of, freedom of movement within an expanding Europe does not seem high on its agenda.