CAA confirms changes to Small Business ATOL

The Civil Aviation Authority confirmed today that it will retain the Small Business ATOL but it has announced changes to the scheme, which will kick in on October 1.

Existing SBA holders will be able to retain their licence as long as they carry no more than 500 passengers a year, their turnover is less than £1 million a year and they will have to pass a new solvency test.

The CAA estimates that fewer than 50 existing SBA holders exceed the £1 million cap and will have to apply for a standard ATOL, which will require them to have £30,000 in paid up share capital, although this is £20,000 less than originally announced.

New SBA applicants will also require £30,000 in paid-up share capital and an initial bond of £50,000 which, the CAA says, will ensure all  ATOL holders ‘meet a proportionate level of financial resilience’. 

The CAAsaid that it had taken account the 167 responses it received from the travel industry as part of the consultation paper ‘Rebalancing ATOL’ issued in June 2014.

"There was a broad acceptance that all ATOL holders should be subject to financial vetting, however some responses suggested the proposals could be unaffordable for smaller businesses and create barriers to entry in the market," it said.

In addition, to the changes to SBAs, all new standard ATOL applicants will be required to provide a minimum bond of £50,000 and those with licensable revenue of £1 million to £5 million will be subject to a new financial test to prove they have sufficient financial resources, details of which will be announced in May.

All the changes will come into effect on October  1.

Also, all accountants reporting on ATOL holders must demonstrate their competence to sign off on ATOL reports to their professional accountancy body, also from October 1.

The CAA said it will continue to develop the ATOL online self-service facility which will allow ATOL holders and their reporting accountants to submit licence applications and financial reports online.

Head of ATOL Andy Cohen said: "We received a useful response from the travel trade to our original consultation and we’ve taken on board the concerns expressed, along with advice from the CAA’s Consumer Panel.

"We now have now arrived at a package of measures where genuinely small businesses can continue to utilise the SBA category, but where no business can offer ATOL protection without having gone through a financial test proportionate to their size.

"This rebalancing of the ATOL licensing arrangements means the CAA will be carrying out financial checks on all ATOL holders appropriate to their size; this will enable us to reassure holidaymakers that financial checks have taken place and the likelihood of detriment and inconvenience is reduced.

"We believe that this will help to increase consumer confidence in the ATOL."