CAA in holiday protection rethink

Changes in the way people buy their holidays has finally led the Civil Aviation Authority to launch a major consultation into holiday protection.

The announcement comes at the same time as a warning from the Air Travel Insolvency Protection Advisory Committee (ATIPAC) that many people putting together their own holidays may have no protection at all if their airline or accommodation provider collapses.

The CAA’s ATOL scheme has been in place for 30 years and many people are now questioning if it is still effective due to the rise of internet booking and passengers putting together their own packages.

UK package operators complain the current system is unfair because they have to pay for the ATOL bonding protecting flights while no-frills carriers do not. ABTA president John Harding recently found himself in hot water when he said he wanted a no frills airline to collapse in order to highlight the dangers of customers putting together their own package holiday.

John Cox, ATIPAC’s Chairman, said: “The CAA is currently working with the Government to change the law so that agents who sell ‘split contract’ air packages will need to hold an ATOL and provide financial protection to customers.

“This will remove one loophole. But Internet sales are a bigger issue and all the signs are that this part of the market will keep growing in future. Unless Government tackles the issue, the number of holidaymakers without any financial protection will also keep rising.”

He added: “What makes it worse is that people really don’t understand that they are taking a risk. The whole structure of financial protection is so complicated that most holidaymakers are just very confused.”

This confusion is highlighted by CAA research which shows that 66% of people wrongly believe that they are fully protected even when booking directly with a scheduled airline.

Commenting on the consultation Helen Simpson, director of the CAA’s Consumer Protection Group, said: “We’re hoping to get a lot of input from the trade and consumers, which will help us to shape our ideas so that we can put proposals to Government. Although the current system has worked well in practice, particularly given the changes that have happened in holiday sales since the legislation was introduced in 1971, we think the time is right for a thorough reappraisal.

A copy of the consultation paper can be obtained from the ATOL website at www.atol.org.uk. Responses have to returned by 7 November.