Nearly twice as many ATOL companies failed in the year to March 31 compared with the previous year, according to the 2006 Report and Accounts of the Air Travel Trust.
A total of 25 ATOL companies failed in the year, 11 more than in 2005 and the highest level for the past 10 years.
Eleven failures involved a call on the Trust causing expenditure of £4,643,000, an increase of more than £4 million over the previous year.
The Trust has no income and interest charges were £602,000. The year-end deficit increased to almost £16 million.
The Civil Aviation Bill, which includes powers to replenish the Air Travel Trust Fund, is expected to gain Royal Assent later this year.
In April, the Civil Aviation Authority issued a consultation document proposing that bonding be replaced with a £1 per passenger ‘Consumer Protection Charge’.
Even if the CPC does not replace bonding, it is expected that a level to replenish the AT will be introduced on all bookings taken after September 2007.
In a letter to the Secretary of State today, Air Travel Trust chairman Roger Mountford said: “The Trust has been in deficit since 1996 and this year the total deficit rose from £10.6 million to just under £16 million.
“In recent years, calls on the Trust caused by ATOL failures were at a low level and frequently the amount of loan interest paid exceeded the amount of compensation paid to air passengers.
“However, this year has seen a significant increase in the number of failures resulting in a Trust call, and consequently in Trust expenditure, which amounted to £5.2 million.
“The Trustees welcome their ability to put the Trust on a positive footing once again and to be able to continue protecting UK air passengers into the future.”
The biggest call – £3.1 million – was from Cruise Promotions, trading as Cruise Control, which folded in October.
This was the largest call on the Trust for the last nine years and caused a total expenditure of £4.5 million.
When it failed, 810 passengers had to be repatriated and a further 12,500 refunded.
By Bev Fearis
