A tax on every flight in the UK should be introduced to pay for the repatriation of holidaymakers should airlines fail, the head of a major travel organisation has urged in the wake of Monarch’s demise.

Mark Tanzer, chief executive of the Association of British Travel Agents (Abta), said the levy would be used to help bring stranded travellers home should their carrier go into administration, and hit out at the Government for its handling of the Monarch collapse.

Under current Atol regulations, only those who book a flight as part of a package holiday are eligible for assistance from the Government and Civil Aviation Authority (CAA).

Speaking at the Abta annual convention in the Azores, he said the Government decision to repatriate holidaymakers against the principles of Atol protection and bill the taxpayer was “completely unsatisfactory” and an indication that consumer laws need urgent change. He said Abta had called for review before but been “rebutted by successive governments”.

“It is a complicated picture, but two things would help hugely: firstly, the CAA needs to be more transparent in its communications,” he said. “Part of the ATOL Regulations stipulate that even if you sell only one ATOL protected package a year, you have to advertise yourself as ‘ATOL Protected’.

“Only five per cent of Monarch’s passengers were travelling on Monarch package holidays, yet to the outside world Monarch was an ‘ATOL Protected’ company... this really does matter when you have 110,000 people overseas and another 700,000 yet to travel.

“The second point that needs to be addressed is the situation regarding customers who simply purchased a Monarch flight as a scheduled airline ticket. There is no repatriation scheme for these customers.

“Notwithstanding this, the government decided that they would repatriate everyone, free of charge, and try to recoup as much as it could from Atol holders and credit card companies, who were not consulted, and certainly have had no say in the cost incurred.

He continued: “This is completely unsatisfactory. The taxpayer will end up picking up a large bill, whatever happens, and the industry is left wondering what is the point of Atol protection if everyone gets brought home anyway. And it sets a precedent for the next airline failure, where customers will expect the same free repatriation.

“Either the government sticks to the position that if you’re unprotected you’re on your own - which requires an honest communication campaign with members of the public - or they decide on principle to bring home stranded passengers, in which case they need to have a fighting fund raised by a levy on all airlines.

"Abta has long argued for an all-flights levy, and been rebutted by successive governments, but the Monarch example makes an unanswerable and urgent case for revisiting the issue.”

There has long been confusion among consumers over exactly who is covered for events such as Monarch’s collapse, as Atol protection does not apply to a company but to a specific set of holiday arrangements that are not always clearly understood.

According to Tanzer: “The current situation makes it virtually impossible for the customer to make an informed, rational choice, damages confidence in the industry, and is not sustainable.”

The Abta convention held in the Azores has been the scene of much soul-searching, following the collapse of Monarch Airlines and the huge repatriation efforts undertaken to return its stranded customers to the UK.

Monarch’s former chief executive Andrew Swaffield chose last year’s event to announce a turnaround in UK travel giant’s fortunes, with £165m of new investment from Greybull Capital.

“Running an airline in Europe – home to some of the world’s biggest low-cost carriers – is not for the faint of heart,” said Swaffield in 2016. “But we’re up for the fight – and you can bet on our future.”

However, almost exactly a year later, Abta’s chief executive Mark Tanzer was forced to confront the events surrounding Monarch Travel Group’s failure to renew its Atol licence and its subsequent entry into administration.

“Anybody who has been involved in a company failure knows that it is an extremely painful event for staff, customers, business partners and shareholders,” said Tanzer. “In our sector that pain is particularly widespread when the company is an airline, and we will feel the reverberation of Monarch’s failure for some time to come.”