CAA launches consultation over £1 levy to replace ATOL

The Federation of Tour Operators has welcomed today’s proposals for consultation from the Department for Transport and Civil Aviation Authority for reforming ATOL protection.

The consultation focuses on three options:

1. do nothing

2. continue with the current bonding scheme with additional contributions to the back-up fund, the Air Travel Trust Fund (ATTF)

3. remove bonding from April 1 2008 and instead, tour operators make a flat rate contribution to the ATTF of £1 for each passenger booked on an ATOL holiday.

FTO director general Andy Cooper said: “Doing nothing is not an option because travellers are confused about whether their journey is protected or not, and the existing arrangements are inadequate to meet calls upon funds to recompense passengers in the event of a major failure.”

He said it supported plans for a £1 per passenger levy to replace the current system.

“It meets the Government’s goal of reducing red tape, offering the widest scope for simplification of the existing compliance arrangements. ”

But he added: “We will continue to lobby strongly however for all airlines to be included in the £1 per passenger consumer protection charge.

“Simply continuing to limit financial protection to the inclusive tour industry and its customers ignores the obvious growth of no frills airlines and independent bookings through the internet.

“Research shows that these customers are confused about who is and is not protected, and in the interests also of a level commercial playing field for UK tour operators, the levy should be extended to all air travel with consideration also given to extending it to all surface travel.”

ABTA said it agreed that option 3 was the best. “Option 2 is definitely the worst,” said a spokesman.

AITO chairman Derek Moore said: “The move to replace travel bonds represents a great opportunity for our members, who are generally the small and medium-sized enterprises (SMEs) of the tour operating sector.

“The ATOL Protection Contribution (APC) is a much fairer system all-round. It will reduce our members’ costs, release capital tied up in their businesses and simplify compliance.

“It also marks the first and very welcome step by Government to level the playing field between the totally unregulated airline sector and the currently very heavily monitored tour operating sector.

“The low cost of APC, set at a suggested £1 per passenger, allied with its much-anticipated visibility, will make it an extremely effective way of providing our clients with full financial security.

“The public tends not to realise the added value offered by tour operators until something goes wrong. We hope that this new focus on passenger protection will alert customers to the key extras that a tour operator offers.

“It should make consumers question the worth of spending time booking direct arrangements with airlines, accommodation providers and car hire companies, only to be left high and dry should something go wrong.”

Transport Minister Gillian Merron said: “The Government is committed to better regulation. This consultation is all about maintaining protection for the travelling public and reducing costly and unnecessary burdens on businesses. I welcome the consultation as a major step forward in ensuring a fair and effective system for the future.”

Sir Roy McNulty, chairman of the CAA, added: “It is important to review the current bonding scheme, which has remained largely unchanged since the 1970s, and to consider whether it is still a proportionate approach to the risks that need to be addressed.

“Licence holders face increasing competitive pressures and these proposals represent an opportunity for them to reduce their costs.”

By Bev Fearis