There are no plans to form a fund specifically for compensating travellers and travel agents in the event of an airline closure, Secretary for Transport & Housing Eva Cheng says.

She told the Legislative Council today that because airlines in the market at present are vastly different in scale, and internationally there is no precedent for reference for setting up this type of funds, there would be significant difficulties implementing it. The levy of any compensation fund will often be borne by consumers and would likely to lead to increases in airfares.

"We would thus need to consider this carefully with a view to balancing the development of the industry and the need to protect the interests of consumers and travel agents," Ms Cheng said.

The Financial Services & the Treasury Bureau will start the Companies Ordinance rewrite exercise phase II next year and review the winding-up related provisions.