If you’re a business that offers flight packages or flight-only sales to UK passengers, you’re legally required to get an Air Travel Organiser’s Licence (ATOL). There is a fee, fitness and finance test and a requirement to implement a mechanism that protects customer money, such as a bond. Licences are renewed annually, where a similar reassessment is performed. You can apply from an ATOL franchise or accredited body, not just directly from the CAA (Civil Aviation Authority).

The CAA aims to reach a decision 12 weeks after receiving your completed application pack. In reality, we see a real mix. Some applications are finalised within six weeks, but more complex groups can take up to a year.

The CAA uses different ratios to determine whether an applicant or existing ATOL holder passes its financial criteria. There are four ratios for small business ATOLs and a further three for standard ATOLs. You can check whether you pass the criteria by running the ratios on your figures using a self-assessment available on the CAA’s website. Applicants requiring a licence of £20m ATOL turnover or more will face more detailed and frequent assessments.

A new applicant into the ATOL system must provide a bond for the first four years of holding the licence. This is calculated different ways depending on if you’re applying as an SBA or a standard ATOL holder. There are alternatives to providing a bond, such as trust and escrow accounts, but these tend to be considered on a case-by-case basis.

You need to submit an ATOL application before you start conducting any ATOL licensable business. It may take time to gather the necessary documents, and you can only submit them through the online system once you’ve collated all the information. It can take the CAA several months to process the application, so it’s vital to ensure you submit in sufficient time.

Businesses that act as the agent of an ATOL holder, those that exclusively sell business travel under a general business travel agreement, or those that act as an airline ticket agent don’t need an ATOL. In addition, the CAA lists a number of other specific exemptions in its ‘Official Record Series 3’. 

You’ll receive your ATOL number and licence document. There are terms and conditions to holding an ATOL, including making sure your customers are clear on their protection in your publicity material and documentation, as well as reporting your sales figures regularly to the CAA. Your licence document sets out your authorised passenger and revenue figures for the year, which you should regularly monitor to ensure you remain within them.

This is the consumer’s proof their trip is ATOL protected and tells them what to do if their ATOL holder ceases trading. As an ATOL holder, you are required to issue the ATOL Certificate immediately to your customers in the format outlined by the CAA.

An ATOL Certificate needs to include passenger details, number of passengers, product description, destination, number of nights, flight details and the name of the ATOL holder protecting the trip. There can’t be any branding on the ATOL Certificate – it must follow the CAA’s guidelines.

There are three different types of ATOL Certificates; single-contract packages, multi-contract packages and a version for ATOL flight-only sales.

An ATOL Certificate should be re-issued as soon as possible if any information changes more than 72 hours before the customer is due to depart.

The ATOL Protection Contribution (APC) is a charge payable by ATOL holders for every passenger who books an ATOL-protected flight or holiday with them. It is currently £2.50 per passenger and for ATOL Holders is payable either monthly, quarterly or annually. APC goes into the Air Travel Trust Fund, which meets the costs of refunding and repatriating customers in the event of a failure.

You would need to submit a variation to increase the limits on your licence, permitting you to sell more licensable business. Small business ATOLs have a limit of £1m and 500 passengers, but standard ATOLs have quarterly limits based on departures, which you’ll need to amend if you expect these limits to be inadequate.

Yes, you can – this would also be via a variation. Moving from an SBA to a standard ATOL will mean a new financial assessment based on the seven ratios and may require additional bonding if needed. This is calculated differently for standard ATOLs.

Moving from a franchise or accredited body ATOL to an ATOL direct with the CAA is also possible. This involves discussions with the franchisee or accredited body regarding departing the scheme. Then the company would need to meet the criteria for an SBA or standard ATOL, such as the financial assessment. A bond may also be required, although the CAA may consider any time spent holding an ATOL via the franchise or accredited body.

An ARA has an important role as they are required to sign off certain financial information – most commonly during the ATOL annual renewal. They need to be a member of an eligible institute (i.e. ICAEW, ACCA), pass an online test and be on the CAA’s list of approved ARAs.

ATOL holders need to appoint an accountable person (AP) who is responsible for ensuring they comply with the CAA’s regulations and terms and conditions. They must be a director, sole trader or partner and pass an online test. APs must have a good knowledge of the business and access to the systems and understand their obligations. An AP is responsible for signing off documents during the renewal process and for variations.