It’s a little over a year since the launch of the ATOL Consultation on funding arrangements. At the recent ABTA Travel Law Seminar, TTC’s Martin Alcock summarised his views on the progress, timescales and what changes might be on the horizon.
If you didn’t manage to catch Martin’s talk, here are his key takeaways:
- The ATOL Consultation covered four main areas. The most important were the proposals to i) reduce reliance on customer money, and ii) introduce risk-based pricing to the ATOL Protection Contribution. The additional proposals to iii) change the procedures around amending agency agreements and iv) increase the frequency of APC payments for Small Business ATOL holders were pretty non-contentious.
- Despite the consultation’s preamble and rhetoric, we believe the primary motivation for changing the ATOL scheme is the parlous state of the Air Travel Trust Fund.
- The consultation set out a menu of different options for consideration. Though, just like the menu in Betty’s Traditional Pie & Mash shop, none of the choices were particularly appetising.
- Option A was very much the jellied eels of the menu. It set out a mandatory framework of either bonds or client money segregation that all ATOL holders would have to comply with.
- Option B set out a tailored framework. It would allow ATOL holders to choose a blend of bonds and customer money segregation that would best suit their business model.
- The CAA has been tight-lipped about which option they might require. CAA Director Paul Smith may have given a clue in April 2022, when he told an AITO conference audience there is not necessarily likely to be a one-size-fits-all approach.”
- Option C set out the choice for ATOL Protection Contribution (APC). Either a fixed APC charge for all ATOL holders (which would presumably be higher than the current £2.50 per passenger) or some kind of variable charge based on an ATOL holder’s risk or holiday price.
- Option D introduced the concept of an Open Market Solution. This would effectively privatise the protection of consumers, by making a commercial insurance firm responsible for running the scheme. It would also bring an end to the need for the current ATOL function, so we think it’s as unlikely as turkeys voting for Christmas.
- We understand the CAA received an unprecedented number of responses to the proposals set out in the consultation but at this point, we still have far more questions than answers: We still don’t know how important stakeholders like insurers and merchant acquirers will react. What transition timescales will be allowed. What impact the proposals will have on travel agents. And what additional complexity will be imposed on what is already the most complex scheme of travel protection in the world.
- We expect the CAA to release a summary of responses sometime in May 2022. Then there’ll be a second consultation later in 2022, which will narrow down the options and ask for final views.
If you need help understanding how the suggested changes in the ATOL Consultation may affect your business, please get in touch.
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