ATOL overhaul underway as
government plans to extend holiday scheme to millions
The biggest
overhaul of financial protection for holidaymakers in more than a
decade officially got underway today. Up to six million extra
holidays could be covered by the Air Travel Operators'
Licence (ATOL) scheme under the reform proposals put forward for
consultation by Aviation Minister Theresa Villiers.
Introduced over 40 years ago, the ATOL scheme offers financial
protection for those booking a package holiday - enabling
travellers to complete their holiday or receive a refund in the
event of their holiday company becoming insolvent. However,
changes in the way holidays are booked since the scheme was first
introduced mean there are now many holidays available which look
like packages but fall outside the existing legislation, leading
to confusion amongst passengers over their level of protection.
The reforms are also intended to put the ATOL fund back on a
financially sustainable basis, removing the need for the taxpayer
support currently given via a government guarantee.
Aviation Minister Theresa Villiers said:
"As we move into the busy summer period, millions of us
will be heading abroad on holiday. While the chances of a holiday
company going under are thankfully very low, the impact on those
affected can be significant. Recent years have highlighted not
only how important financial protection is to holidaymakers, but
also the fact that the ATOL scheme is in urgent need of reform.
"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."
Civil Aviation Authority Chair Dame Deidre Hutton said:
"The CAA welcomes the reform proposals because they will
bring clarity for consumers and put an end to the situation where
people are left unsure to what extent their holidays are protected
if their company fails. Today's announcement will empower
consumers to make informed choices about their air holidays. This
is the first step in the reform of consumer financial protection
and the CAA will be consulting on further proposals on the funding
of protection in the autumn."
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. The
proposals put forward today confirm the commitment to improve
clarity for consumers and address the scheme's finances by:
extending the ATOL scheme to "flight-plus"
holidays comprising a flight and other holiday component bought
within two successive days;
ensuring 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;
helping ensure that 'agent for the consumer'
businesses arranging holidays are fully aware of their legal
responsibilities to consumers.
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.
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. 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.
Notes to Editors
Notes to Editors ATOL is a scheme that protects consumers on
package holidays and some flights from the insolvency of their
tour operator or travel agent. It is run by the Civil Aviation
Authority. In 2010 over 190,000 holidaymakers were repatriated or
received full refunds when their ATOL tour operator went bust.
Most businesses selling package holidays including a flight have
to have an ATOL licence issued by the CAA. Businesses pay £2.50
for each booking into a Fund that meets the costs of refunds and
repatriations. The Fund is currently operating at a deficit, and
relies on a Government Guarantee, currently £42m, to access
commercial borrowing facilities to meet its obligations. The ATOL
scheme was first put in place on a statutory basis in the early
1970s. It was last substantially overhauled in 1995. Airlines are
legally exempt from the requirement to hold an ATOL, however any
package holidays they sell must still be financially protected. A
number of UK airlines have subsequently set up subsidiary
companies to sell package holidays that do have an ATOL licence.
Legally, businesses are required to have an ATOL licence if they
sell package holidays or certain 'flight only'
tickets to customers. Some businesses, however, do not technically
'sell' the flight element of a holiday, instead
they buy it on behalf of the customer. This arrangement, referred
to here as 'agent for the customer', does not
require an ATOL licence. Customers buying a flight and
accommodation in this way are not therefore protected by the ATOL
scheme, but may be unaware of this.
Contacts:
DfT Press Office - Marine and Aviation
Phone: DfT Press
Office 020 7944 3118
Mobile: 020 7944 4292
nds.dft@coi.gsi.gov.uk