ABTA unveils sweeping changes

ABTA has scrapped its bonding rules for members and opened the door for online companies to join the association.

In a major drive to modernise the trade body, Newman Street admitted it needs to become more representative of today’s industry.

It will also no longer guarantee consumers that they will either be refunded or get their holiday in the event of a company failure. The association said it had been the victim of fraud too often.

An awareness campaign will be launched to inform the public of the changes.

Spokesman Keith Betton said the “old-style” association that represented traditional companies in the 70, 80 and 90s had effectively been ditched and replaced with a more forward-thinking body.

Lastminute, Expedia, Opodo and ebookers are now all expected to consider joining ABTA.

“It’s important that when we tackle the government, we have the majority of the industry with us,” said Betton. “We cannot lobby Tony Blair and only be speaking for part of it.”

He admitted that the relevance of the association would have continued to fade had changes not been made.

Among the major changes is a relaxation of ABTA’s stringent bonding requirements. Although bonding will remain – and remain as the preferred method of financial protection – companies can make other financial arrangements through a trust fund with another body or through an insurance policy.

ABTA will not monitor the trust fund, requiring only a declaration that the law is being complied with. All claims will be handled by trustees.

It was the bonding requirement which deterred online companies from joining as the bonds – calculated as a percentage of turnover – would have been exorbitant.

An Expedia spokesperson said: “It is good to see that ABTA recognises the growth in the market of those consumers who wish to book all or part of their trip on the Internet.

“Once we have had a chance to review the new membership criteria then we will certainly work with ABTA to establish the best way forward. It is imperative that industry organisations reflect the future.”  

In further changes, members will be spared the arduous and costly task of submitting audited accounts.

Consumers will also feel the effects of the shake-up. Whereas previously it guaranteed to either refund or ensure the holiday went ahead if a member went bust, that will no longer happen.

“ABTA will no longer pay claims where the retailer fails having taken money without making a booking,” said Betton. He said the association had been a victim of fraud too often.

“We need to clearly communicate this,” said Betton.

In addition, while ABTA will continue to pay out to an operator should a retail member fail, claims will be capped at three times the operator’s annual subscription.

It will end enormous payouts made the association when large retailers – such as Cruise Control – go out of business.

Report by Steve Jones