An insurance provider has warned that there are hundreds of ATOL-holders operating without any protection against the collapse of a supplier, which could put an unbearable strain on the Air Travel Trust Fund in the event of a failure.
International Passenger Protection hailed the proposed ATOL reform as ‘a step in the right direction in helping consumers make an informed travel purchase’.
However, director Michael Ward added: "No single fund or insurance could cover every travel transaction in the UK and the trade should be wary of believing in a solution to include everything under ATOL.
"There simply is not the capacity through any premium or fund, even if there were the potential cost would be exorbitant. The only realistic solution is an informed sale leaving the consumer to benefit from the levy or be protected by their travel agent or tour operator through insurance."
Ward said he believed the Civil Aviation Authority was potentially under strain from ATOL agents not taking out adequate protection against airline and other end suppliers collapses.
"Whilst we have seen a dramatic increase in agents taking out corporate SAFI (Scheduled Airline Failure Insurance) or End Supplier Insurance, there are hundreds of ATOL holders without any cover.
"An airline insolvency could lead to the collapse of unprotected ATOL holders which leaves the CAA to meet all of the responsibilities themselves rather than the agent. It is therefore imperative that the CAA ensures agents are protected to prevent further deficit in the ATTF (Air Travel Trust Fund)."
By Linsey McNeill
