Press release

Millions of extra holidays protected as government updates ATOL scheme

This news article was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

New measures to strengthen and modernise the ATOL holiday protection scheme.

Up to 6 million extra holidays each year will be fully protected against the failure of a travel company after Aviation Minister Theresa Villiers confirmed measures to strengthen and modernise the Air Travel Organisers’ Licensing (ATOL) holiday protection scheme today.

Running since the 1970s, the Air Travel Organisers’ Licensing scheme offers customers whose holiday company becomes insolvent a full refund or repatriation at the end of their trip if they are already abroad.

Following a consultation last year, the changes confirmed today will come into effect on 30 April and will mean:

  • “Flight-Plus” holidays sold by tour operators and travel agents are included in the ATOL scheme. These are holidays that look like package holidays but are sold in a way which currently falls outside the scheme
  • passengers are given a standard, recognised certificate at the point of purchase, so they know whether their trip is protected by the ATOL scheme or not

Aviation Minister Theresa Villiers said:

The ATOL scheme has been providing peace of mind for holidaymakers for decades, but the way we book holidays has changed and the scheme needs to move with the times. All too often customers are unsure as to whether they are protected or not.

The changes I am making today will provide much needed clarity and reassurance for millions of people booking their holidays. These reforms will equip ATOL to deal with the realities of the modern holiday market, enabling the scheme to protect holiday makers for many more years to come. This is an important step forward for consumer protection.

The changes confirmed today will also help return the scheme to a more secure financial footing. Following a series of high-profile insolvencies in recent years, the fund which covers the costs of repatriation or refunds is currently running at a deficit, supported by a government-backed guarantee. It is hoped the new rules will eliminate this within 3 years, reducing the risk to the taxpayer.

Last month the government also introduced the Civil Aviation Bill into Parliament, including a clause which could enable the Secretary of State for Transport to make further changes to the ATOL scheme in future. These include the option to include holidays sold by airlines, which are currently exempt from the scheme, as well as the power to bring holidays arranged on an ‘agent for the consumer’ basis to be brought into the scheme. Subject to parliamentary process, the government would carry out a full consultation and impact assessment on any regulations that would give effect to these powers.

Notes to editors

The ATOL scheme is administered by the Civil Aviation Authority (CAA) and ensures passengers who have not already travelled receive a full refund, or are brought home free of charge if abroad at the time of insolvency.

An estimated 37.2 million people fly abroad on leisure trips each year. In the year to 31 March 2011 there were 18.5 million ATOL protected holidays and flights, and 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 issued by the CAA. Businesses pay £2.50 for each booking into a fund that meets the costs of refunds and repatriations.

The ATOL scheme was first put in place on a statutory basis in the early 1970s. It was last substantially overhauled in 1995.

A summary of consultation responses and further details on the new regulations are available on the Department for Transport website: ATOL reform consultation

Airlines are legally exempt from the requirement to hold an ATOL, however any package holidays they sell must still be financially protected, under the Package Travel Regulations. A number of UK airlines have subsequently set up subsidiary companies to sell package holidays that do have an ATOL.

Further details on the Civil Aviation Bill which is currently proceeding through Parliament are available on the Department for Transport website.

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