Press release

Views sought on holiday protection scheme

A call for evidence has opened as part of the government’s reform of the Air Travel Organisers’ Licensing (ATOL) scheme.

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

Aeroplane

The government is calling for views on how consumer protection for holiday-makers can best be provided.

The call for evidence is part of the government’s reform of the Air Travel Organisers’ Licensing (ATOL) scheme, which provides financial protection and repatriation for holiday-makers in case their holiday company goes bust.

Aviation Minister Simon Burns said:

The ATOL scheme provides financial protection for millions of holiday-makers who travel abroad by air each year in the event of their package travel company becoming insolvent.

Everybody recognises that passengers need to be sure they can get home if things go wrong and they can rest assured that this protection will continue. But the systems used by ATOL date back to the 1970s so the time is right for a fundamental review to consider whether the scheme is still the best way of providing consumers with financial protection or whether there might be more efficient and effective alternatives.

The call for evidence is a first stage, high level consultation setting out the need for change and calling for evidence to help shape the government’s views on the future structure of financial protection. Interested stakeholders are urged to come forward with ideas on how best to ensure robust consumer protection, lower risk for government and improve the regulatory burden for business.

Notes to editors

The ATOL scheme protects holiday-makers when their holiday company goes bust. It provides refunds if they have not yet travelled and allows them to finish their holiday and be repatriated if they are abroad at the time of collapse.

Over the last 4 years, the scheme has repatriated over 100,000 people and provided refunds for almost half a million.

The scheme is administered by the Civil Aviation Authority (CAA).

The ATOL scheme is the UK’s way of implementing the requirements of the EU Package Travel Directive (PTD). We expect the Commission to release proposals for a revision of the PTD in the coming months. Where appropriate we will use the results of the call for evidence to inform our negotiating position for the PTD review.

On Monday, 20th May, the Air Travel Trust (ATT) published its annual report and financial statements for the year ending 31 March 2013, which showed that the fund has returned to surplus for the first time since 1996. The report shows that the ATT received £48.1 million in ATOL Protection Contributions (APC) from 19.2 million passengers during 2012/2013, up from £42.6 million from 17.3 million passengers in the previous year. The report also shows there were only 11 ATOL failures during 2012/2013, representing an estimated cost to the ATT of £844,000. This was down from 23 failures in 2011/2012, at a cost of over £14 million. As a result, the ATT fund is now just over £18 million in surplus – the first time the fund has been in surplus since 1996. For more information, visit the CAA website.

In April 2012 the government introduced Flight-Plus regulations, which extended ATOL protection to holidays where a consumer requests to book a flight and one or both of accommodation and car hire within a 2 day period.

Clarity for consumers was further improved by the introduction in October 2012 of the ATOL certificate, a standardised document, issued with every protected booking, setting out the level of protection.

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Published 23 May 2013