Department for Tansport
and Civil Aviation Authority announce consultation on reform of ATOL bonding
DEPARTMENT FOR
TRANSPORT News Release (036) issued by The Government News Network
on 2 April 2007
The Department for
Transport (DfT) and Civil Aviation Authority (CAA) have today
launched a consultation to seek views on options to reform ATOL bonding.
Reform would be an administrative simplification for tour
operators and would not affect passengers. Since the introduction
of ATOL in 1972, operators have always had to pay for arrangements
to financially protect their passengers.
This document is the culmination of a consultative process with
industry, which started in December 2005, on proposals to reduce
the regulatory burden on tour operators. The consultation invites
responses from stakeholders and other interested parties on two
options for change: to continue the current bonding scheme with
additional contributions to the back-up fund, the Air Travel Trust
Fund (ATTF); or to replace bonding with an approach whereby tour
operators would make contributions into a protection fund which
meets all ATOL financial protection costs.
The second option proposes:
* the removal of bonding from 1 April 2008; and
* instead, tour operators make a flat rate contribution to the
ATTF of £1 for each passenger booked on an ATOL holiday. This
would cover all refund and repatriation costs arising from the
failure of tour operators.
Transport Minister Gillian Merron said:
"The Government is committed to better regulation. This
consultation is all about maintaining protection for the
travelling public and reducing costly and unnecessary burdens on
businesses. I welcome the consultation as a major step forward in
ensuring a fair and effective system for the future."
Sir Roy McNulty, Chairman of the CAA, added:
"It is important to review the current bonding scheme, which
has remained largely unchanged since the 1970s, and to consider
whether it is still a proportionate approach to the risks that
need to be addressed. Licence holders face increasing competitive
pressures and these proposals represent an opportunity for them to
reduce their costs."
The consultation is available on DfT's website at http://www.dft.gov.uk/consultations/open/.
The deadline for responses is Friday, 29 June 2007.
NOTES TO EDITORS
1. Air Travel Organisers' Licensing (ATOL) is managed by the
CAA and gives comprehensive protection from losing money or being
stranded abroad to the 27 million people in the UK who buy air
holidays and flights from tour operators each year. It is by far
the largest travel protection scheme in the UK, and the only one
for flights and air holidays sold by tour operators.
2. All tour operators selling flights and air holidays must hold
a licence from the CAA. Before it gets a licence each operator is
examined to ensure it is properly managed and financially sound,
and it must lodge a bond - a financial guarantee provided by a
bank or insurance company. If the operator fails, the CAA then
uses the money to pay for people abroad to continue their holidays
and to travel home as planned, and to make refunds to those who
have paid but not travelled. If the bond is not enough, any
shortfall is met by the Air Travel Trust Fund (ATTF), which is
managed by the CAA and backs up the individual bonds.
3. European legislation on package travel requires travel
organisers to provide refunds and consumer repatriation in the
event of insolvency and in the UK this requirement for air tour
operators is met by the ATOL scheme.
4. The Government and CAA are consulting on the reform of ATOL
bonding for two reasons: firstly, to reduce costs to tour
operators in line with the principles of better regulation and
secondly, to replenish the ATTF. The fund has been in deficit
since 1997 following a series of tour operator collapses during
the 1990s. The Civil Aviation Act 2006 gave the CAA powers to
require contributions from tour operators to replenish it.
5. In 2005-06, the ATOL scheme rescued or refunded over 21,000
holidaymakers and paid out over £8.8 million to those on
ATOL-bonded holidays. In the past ten years, the scheme has
rescued over 51,000 people from being stranded and refunded over
173,000 others to the value of £54.5 million.
6. Further information about ATOL is available on the ATOL
website at http://www.atol.org.uk.
Public Enquiries: 020 7944 8300
Department for Transport
Website: http://www.dft.gov.uk