4 Conclusions
42. Overseas travel and holiday bookings have some
unique features for the consumer: significant cost, deferred take-up
and the risk of losing one's money or being stranded abroad. From
the Government's perspective there is also the potential liability
that it may have to repatriate UK citizens at public expense.
43. For consumers booking a conventional package
holiday through an ATOL travel agent or tour operator, the current
scheme works reasonably well, providing protection at modest cost.
However, the current scheme is not sufficiently clear for the
industry or the regulator; and it is anomalous and unfair to certain
sections of the travel industry. It is also in a parlous financial
state, surviving only with the help of a £30 million Government
guarantee.
44. Despite demands by the industry for reform, the
short-term changes being introduced by the Government are not
widely supported. The ATOL certificates may improve clarity but
the extent to which Flight Plus will bring in sufficient funds
to eliminate the ATTF deficit cannot be predicted with certainty.
Further insolvencies and claims on the fund cannot be ruled out.
Other aspects are also of concern to parts of the industry. Some
smaller companies were very concerned about the requirements to
provide a bond.[77] Others
were concerned at what they perceived as VAT anomalies.[78]
45. The Government intends to widen the ATOL scheme
to include holiday sales by airlines but it does not appear to
have a policy on flight-only sales by airlines. As such, passengers
may be unclear about their liability in the case of airline insolvency
and the Government will remain liable for the cost of repatriating
UK citizens stranded abroad.
46. Ultimately
the acceptability of ATOL comes down to money: who pays and how
much. A number of the firms currently outside the ATOL scheme
believe that they are being brought in to bail out a scheme that
has got into trouble through no fault of theirs. If the costs
of ATOL cover can be reduced to the 2008 level of £1.00 per
passenger, many of the objections from the travel industry to
its wider application will probably subside. However, if it remains
at the present level of £2.50 the arguments will continue.
The efficient and equitable operation of the scheme by the Government
and the CAA is therefore critical.
77 Ev 50 Back
78
AITO was concerned that some companies were able to avoid paying
VAT on the Tour Operator's Margin Scheme, Ev 44, para 1.3 Back
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