ABTA is to introduce a new scheme to allow agents to safeguard the money of holidaymakers who buy flights or hotels separately, in a move that will close a massive loophole in financial protection.
Chief executive Mark Tanzer, in his opening address to the ABTA Travel Convention, said it was negotiating with the government and the Civil Aviation Authority to introduce a scheme for the majority of travellers who do not purchase a package.
If successful, the scheme could be one of the most radical developments in the industry for years.
Tanzer said that of the 45 million trips taken by Britons every year, only 18 million were protected package holidays and ABTA believed all holidays should be protected.
“We will have proposals [for a financial protection scheme] on the table soon,” said Tanzer.
Co-operative Travel managing director Mike Greenacre backed the move.
“We would support any initiative that seeks to simplify and offer guaranteed financial protection for holidaymakers, whether they buy a package holiday or flights and accommodation separately. This is at the heart of consumer confidence,” he said.
Tanzer acknowledged that there was a currently a big debate in the industry on the protection of holidaymakers’ money but made a strong defence of the recent controversial decision to reinforce its articles of association. This will force bed banks to honour payments collected on behalf of retailers if the agent fails and follows the collapse of Freedom Direct, which left holidaymakers exposed.
“We needed to retain the integrity of the ABTA brand and the value to you in delivery consumer confidence,” he told delegates.
In his address, Tanzer said industry bookings were this year down 10-15 per cent, but margins had not been hit so badly because companies had held prices after cutting capacity.
He said the travel industry was fraught with uncertainty but the prospect of meltdown had receded.
Tanzer put forward a model of a sustainable future, which he called ‘The Happy Place’, and said that to achieve it, companies needed to offer quality and consumer confidence in the form of financial protection.
