Air Travel Organisers’ Licensing Bill

Explanatory Notes

Commentary on provisions of Bill

Clause 1: Air travel organisers’ licences

15 This clause amends Section 71 of the Civil Aviation Act 1982 ("the 1982 Act") to enable regulations to be made protecting the sale of flight accommodation by United Kingdom established organisers elsewhere in the EEA. The making of such regulations will support the United Kingdom’s implementation of the 2015 Directive, which will need to be brought into force by July 2018. Once the 2015 Directive is in force, any business established in the United Kingdom and licensed under ATOL for sales within scope of the 2015 Directive, will no longer need to comply with the different insolvency protection rules of other EEA States, making cross-border trade easier.

16 This Clause also inserts a new subsection (1E) into Section 71 of the 1982 Act to clarify that the Secretary of State may make regulations to exempt any form of flight only arrangement from the ATOL licensing arrangements.

Clause 2: Air Travel Trust

17 The Air Travel Trust is the trust arrangement first established by deed dated 5 January 2004 ("the 2004 deed"), under which contributions from ATOL holders are held and CAA trustees are given powers to compensate consumers. The 2004 deed permits amendment of its provisions by the Secretary of State. This Clause amends Section 71A of the 1982 Act to distinguish the existing Air Travel Trust from wholly new qualifying trusts that may be enabled by subsection (2).

18 Subsection (2) enables the Secretary of State to incorporate, by way of regulations, new forms of qualifying trust into the ATOL trust arrangement. The primary purpose of any new trust will still be consumer protection in relation to the sale of flight accommodation. Since 2004, the market for flight sales has become increasingly diverse. Both CAA experience and feedback from the consultation on modernising the ATOL scheme suggests that in future it may be necessary to enter into separate trust arrangements for different classes of business model, for example Linked Travel Arrangements. This will give greater transparency for businesses and consumers, particularly if there are significant differences between the trust arrangements for different classes of consumer or contributor.

19 Subsections (3) and (4) amend Section 102 and Schedule 13 of the 1982 Act to provide that the affirmative resolution procedure will apply should the Secretary of State propose to make regulations under subsection (2).

Clause 3: Provision of information

20 This Clause amends Section 84(1) of the Civil Aviation Act 1982, which sets out the powers under which CAA are able to request information from persons. These powers are used by CAA to determine whether a person or business needs to hold an ATOL licence. Subsection (2) of this Clause extends the scope of the power to request information to ensure it matches the new scope of the power to make regulations introduced by Clause 1. Subsection (3) ensures that the information power applies to any airlines selling ATOL licensable holidays in the United Kingdom (and airlines established in the United Kingdom selling such holidays in the EEA), that are not covered by Section 84(1)(a). For example, subsection (3) would apply to European airlines that have an air service operator’s licence from another EU Member State and therefore do not need any of the licences granted by the CAA mentioned in Section 84(1)(a).


Prepared 12th July 2017