Industry reacts to today’s ATOL reform announcement

The Government has officially announced today that it is considering widening ATOL protection to airlines.

Announcing its plans for the “biggest overhaul of financial protection for holidaymakers in more than a decade” it said views are also being sought on potential reforms which would require primary legislation.

“These could include bringing holiday sales by airlines into the scheme along with those arranged on an ‘agent for the consumer’ basis,” said a statement by the Department of Transport.

If approved, this new legislation could come into force by May 2013.

In its announcement today, the Government also confirmed plans to:

– extend the ATOL scheme to “flight-plus” holidays comprising a flight and other holiday component bought within two successive days

– ensure everyone booking ATOL protected holidays will get a recognisable ATOL certificate confirming their rights under the scheme for refunds and repatriation should their travel company fail

– help ensure that ‘agent for the consumer’ businesses arranging holidays are fully aware of their legal responsibilities to consumers.

In a huge document outlining its plans, the Department for Transport clarified that ATOL holders under the Flight-Plus scheme will not be brought within the Package Travel Regulations which apply to tour operators.

It also put agents minds at rest that they will not become liable for VAT under the Tour Operators Margin Fund (TOMS).

Subject to the responses received, the Government aims to respond to the consultation in the autumn, with a view to introducing the necessary legislation by January 2012 to capture the peak holiday-booking period for next summer.

It said the consultation also paves the way for further potential reforms to the ATOL scheme in the medium to longer term, seeking initial views to inform more detailed work to be undertaken by the Civil Aviation Authority later in the year.

Aviation Minister Theresa Villiers said:<

“We have always been clear about our commitment to modernising the ATOL scheme, and these proposals are an important step towards achieving just that.

“As well as ensuring up to six million additional holidays are protected, these proposals will help steer the scheme’s finances on to a more sustainable path for the future. We are also making an important step forward on the debate on delivering a wider reform of ATOL in the future.”

Today’s consultation – which closes on 15 September – follows an announcement in February which outlined the approach the Government would take to reforming the ATOL scheme.

Noel Josephides, AITO Council member, said:
“AITO is very happy that this has come out at last and we see it as the first step forward in bringing the whole customer protection up to date.

“It will hopefully improve consumer protection and level the playing field and it is heartening to see that the government is going further to protect travel arrangements that look like packages.

“AITO will work to make sure the pitfalls for customers of companies acting as agents will be pointed out and constantly monitored.”

Jonathan Wall from Elman Wall Travel Accountants said: “Those whose business model relies on staying outside regulation which protects holidaymakers who give those companies monies upfront will find themselves under more and more pressure.

“Those who focus on loopholes are playing a short term and self defeating game-the CAA are committed to closing down loopholes over time.

“Most travel businesses recognise that holidaymakers should have complete financial protection and will consider during the consultation period how they can integrate new processes and procedures into their operations quickly and efficiently.”

He urged those with considered views to respond to the consultation as these can help in the shaping of the detail.

by Bev Fearis