Published on Wednesday, November 16, 2011
Plans by the Civil Aviation Authority to charge agents an administration fee of £25 for each passenger refunded following the collapse of an ATOL-protected flight has been criticised by the trade.
The proposal is included in an annex to the Civil Aviation Authority's ATOL reform Information Paper, published on Monday. It is the first time the trustees of the Air Travel Trust Fund have suggested charging agents a fee for refunding customers.
The Paper said: "This charge is intended to meet the cost in administering the contribution claims.The trustees consider this a reasonable cost for the Flight-Plus arranger to incur, given the statutory obligations on the arranger as well as the trustees' policy on repatriation and contributions.
"In addition, the trustees consider the typical charge is unlikely to be materially more than the commission payments or booking fees that agents typically earn on flight-only bookings."
But On Holiday Group chief executive Steve Endacott said: "What gives the CAA the right to impose a Â£25 admin fee if agents can not charge admin fees in a collapse?"
He was also critical of the CAA's plan to cap contributions to individual agents at 2% of their annual licensed turnover, subject to a minimum Â£50,000 (regardless of turnover) and a maximum of £2.5m.
Endacott said: "What justification is there for the 2% of turnover restriction? I do not follow the logic...why not 100% payment?"
He also queried the legality of the CAA's plan to get access to pipeline monies following the collapse of a supplier in order to speed up refunds. The CAA said changes would be made to ATOL Standard Terms making it a requirement for ATOL holders to inform customers that money paid would be held for the benefit of the trustees of the Air Travel Trust at all times.
It said: "The agent therefore collects and holds money for the principle but ultimately owes this to the ATT if the ATOL holder fails."
Endacott said the move might not be legal and also pointed out it might not be acceptable to credit card companies, who may demand the monies to cover their losses in the event of a supplier failure, or indeed suppliers.
Endacott said the Information Paper "clarifies a lot of key points" but warned there was an "enormous" amount to achieve before the reforms are implemented in April.
By Linsey McNeill
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The recent insolvency of Low Cost Travel Group, one of the large players in the travel industry had a big impact on the travelers, hotels and all related players from both wholesale & retail arms. There were about 27,000 people on a holiday who had booked through the company comprised of a €200 million wholesale arm and €500 million OTA / retail arm.