Holidaymakers could be forced to pay extra for flights to cover themselves in case their airline goes bust.
A Government-backed report launched after Monarch’s collapse has warned that too many passengers fly unprotected, running the risk of being stranded abroad if a firm goes to the wall.
It proposes options to fund future repatriations, to ensure British taxpayers are not left footing the bill.
One could be a levy charged on all flights, which would go into a central pot and pay to repatriate or refund passengers if an airline collapses.
The interim report referred to Denmark, where passengers are charged an extra 20p per flight.
Another option is forcing insurers to cover passengers if an airline collapses, which would push the price of their policy up.
Travel insurance with this extra protection could be made mandatory for any passenger wanting to fly from a UK airport.
Most travel insurance policies do not protect passengers if an airline goes bust, although tourists who buy flights as part of a package holiday are covered under the Air Travel Organiser Licensing Scheme.
Those who buy flights separately by credit card are also protected.
Airlines have already objected to the prospect of a levy, as they fear it could deter passengers.
But Peter Bucks, chairman of the Airline Insolvency Review, said: ‘Even though airline insolvencies are relatively rare, we need to be prepared to deal with the consequences for passengers when one occurs.’
Around 110,000 Monarch passengers were abroad when their airline went bust last October.
It sparked panic among holidaymakers who feared being left hundreds of pounds out of pocket to pay for more expensive flights home and extra accommodation.
To prevent this, the Civil Aviation Authority borrowed planes from other airlines, costing the Government £60million.
The final report will be published later this year.