ATOL reforms finally announced by government

After a delay of some months due to last May’s change of government, the Department for Transport (DFT) has now announced a major overhaul of the Air Travel Organisers’ Licence (ATOL) scheme. This follows a consultation at the beginning of 2010 looking at proposals for modernising the Civil Aviation Authority’s (CAA) regulatory framework (the CAA enforce the ATOL scheme).
The changes aim to clear up confusion about what sort of holidays are financially protected under the ATOL scheme – which protects consumers in the UK booking a package holiday that includes air travel from operator or airline failure. This confusion has increased over the last 20 years largely due to the emergence of the internet as a way to book different components of a holiday separately and not as a package.
The government has decided to extend ATOL protection to include ‘flightplus’ bookings, subject to a further consultation on the details in the spring and implementation by next year. This is set to bring trips that include a flight booking and one other component, likely to be accommodation or transport hire, booked at the same time or within a day of each other, under its scope, although it is not planned to cover ‘click through’ sales, where consumers click through from one website to another to book different components.
Although the majority of GTOs book holidays through reputable tour operators that hold their own ATOL and therefore take on this responsibility for them, it is essential that those organisers who put together their own trips are aware that the new legislation may apply to them if they are deemed as selling flight-plus holidays onto their members. The new proposals will extend to Small Business ATOL holders (SBAs) as well, which are aimed at organisations operating on a smaller scale (taking up to 500 passengers away by air per year).
Disappointingly, the proposed overhaul still does not address the fact that airlines are not required to hold an ATOL to protect against their own failure, so anyone booking a flight-only or flight-plus option directly with an air carrier will continue to be financially unprotected by the scheme. The government has, however, said that they will consider a case for change later in the year.
ATOL holders, including SBAs, will still be required to pay the £2.50 levy on bookings into the ATOL Protection Contribution (APC), which aims to replenish the Air Travel Trust Fund that finances protection when ATOL holders go bust.
The overhaul further aims to clear up confusion about whether holidays are ATOL-protected by introducing a standard ATOL Certificate that will clearly set out what is covered in any particular booking, listing the protected elements of the holiday and the price paid for them. In the case of a GTO booking through a tour operator, the certificate would be given to the lead organiser if they booked and paid for the holiday or each group member if individuals in the group paid directly. The CAA will be meeting shortly with an industry working group to discuss the timing of the certificate’s introduction.
Any GTOs who are unsure whether they require any form of ATOL can contact the CAA for advice on 020 7453 6700.
We will bring you further news of progress on these changes as we receive it.