The concept of a passenger levy to fund a consumer protection scheme is to be discussed with the industry in a review of ATOL bonding ordered by the government.
The review comes after the government last month rejected proposals by the Civil Aviation Authority for a £1 levy which would have also involved scheduled airline passengers.
The Government and the CAA yesterday announced agreed terms of reference for a review of ATOL bonding. It will focus on reducing the cost of current bonding arrangements – a move that is sure to be welcomed by tour operators.
Work will commence immediately, with a six-month deadline set to identity a solution followed by swift implementation, the CAA said.
The CAA has been ordered to review whether the current bonding system for ATOL holders could be replaced with a “less burdensome” way of meeting tour operators’ customer refund and repatriation obligations.
CAA consumer protection group director Richard Jackson confirmed: “We have been asked to look at reforming the ATOL bonding system and replacing it with a fund based on a customer levy.
“This is a major exercise and not straightforward, but our aim is to find a solution that brings real de-regulatory benefits to licence holders, while maintaining consumer financial protection.”
The CAA will consult licence holders and “other key stakeholders” on its proposals and aims to identify a solution within six months.
The authority said it would focus on reforming the bonding system – rather than wider aspects of ATOL licensing – “with a particular emphasis on reducing the costs to ATOL holders that arise from the current bonding arrangements”.
This would involve considering “moving from bonds to a single per-customer transparent levy to build up a fund, encompassing the Air Travel Trust Fund, for meeting ATOL holders’ refund and repatriation obligations.”
The principal areas for consideration are:
- an enforceable collection mechanism;
- the size of the fund and the period of build-up;
- transitional arrangements;
- whether in the absence of bonding, changes to CAA’s financial monitoring of the industry are required.
Report by Phil Davies
