|
The Air Travel Operators' Licensing (ATOL) scheme was introduced in the early 1970s to protect holidaymakers against the risk of their package tour operator becoming insolvent. The scheme is now in a mess. Whereas it once covered the vast majority of holiday bookings it now covers less than 50% and this proportion is falling rapidly. Holiday sales by airlines and certain types of agent are outside the scheme. The situation is confusing and unsatisfactory for consumers. It is unfair for those sections of the travel and holiday industry that are obliged to hold an ATOL licence and to pay the ATOL protection contribution—£2.50 per passenger. It has proved difficult for the Civil Aviation Authority to administer. Meanwhile, the taxpayer bears the ultimate liability for the Air Travel Trust Fund which is some £42 million in deficit. Substantial reform is needed and overdue.
The Government is proposing reform in two stages. In the short-term, it is broadening the scope of bookings covered by ATOL: "Flight Plus" bookings will require tour operators to apply ATOL protection when accommodation and / or car hire is booked within a day of booking a flight. In addition, a bespoke ATOL certificate will be issued to each customer to clarify the protection provided. In the longer term, the Government is proposing to bring agents for the consumer[1] and possibly the airlines within the ATOL scheme. Provisions to this effect were included in the Civil Aviation Bill. The Government also intends to look at options to put the scheme onto a self-sustaining basis.
We welcome the greater coverage and clarity that these changes are expected to bring. We are concerned, however, that the Government has not based these reforms on an analysis of consumer behaviour and views. In addition, flight-only sales by airlines will remain outside the ATOL scheme, with no clarity on if or how this should be addressed. We recommend a thorough review that distinguishes between the issues of consumer protection and the repatriation of holidaymakers stranded abroad as a result of the financial collapse of their tour operator or airline. We also recommend that the travel industry and CAA jointly develop standardised information for those booking overseas flights that are not ATOL protected. Finally, we recommend that the per-passenger contribution be related to the value of the booking instead of the current flat fee.
The Government's reforms are controversial. Some businesses feel ATOL is an outdated scheme and that they are being brought within its scope to bail it out when they are not responsible for ATOL's financial problems. If the costs of ATOL cover can be reduced sufficiently, this objection may subside.
| 
