Bonding may go within six months
Bonding for operators could be scrapped as early as next year if a new scheme for financial protection is given the go-ahead.
The move would save small operators tens of thousands of pounds a year and, in some cases, make the difference between survival and failure.
The long-awaited study on how to revamp financial protection is currently being scrutinized by senior government officials following research and discussions between the Civil Aviation Authority and the Department for Transport.
It is thought they will rule that everyone buying a flight or package holiday must pay a levy of £1 to build up a fund which would pay out in the event of a failure.
A bill could be introduced at the beginning of the year and, at the same time, bonding for operators would be phased out.
Sunvil Holidays managing director and former Association of Independent Operators chairman Noel Josephides said it would have a massive impact on operators.
“Absolutely this could make the difference between survival and failure for some of the small operators who may be struggling,” he said.
“I know that we write a cheque for £50,000 each year which is effectively money down the drain. It makes a big difference if that burden is reduced.
“Our understanding is that we would still need to be licensed by the CAA, but we would no longer need a bond.”
It is thought passengers will be charged the levy for around four years until a kitty of up to £300 million had been raised. This money would then be invested and used to bail out collapsed companies.
The new laws are being introduced to recognise changing consumer behaviour, as far more people now buy unprotected no-frills flights and book over the internet than in previous years.
Josephides predicted there would be opposition to the levy from airlines, but said they needed to offer their customers protection.
“Anyone who says this is unnecessary is living in cloud cuckoo land because in this climate an airline is more likely to go than a tour operator.”
The new laws would give more comprehensive financial protection, but there would still be gaps in cover. Anyone buying accommodation only overseas would not get a refund if a provider collapsed or failed to honour the contract.
Phil Davies
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