‘Vast majority’ of air passengers will be unprotected, CAA warns

And there are fears that the continuing rise in the popularity of no-frills scheduled flights will lead to the majority of the country’s 50 million annual airline passengers being left exposed.

Figures published today by the Civil Aviation Authority will add further weight to calls for government action over proposals for a £1 levy to provide cover against scheduled airline collapse.

Travellers who buy air-based travel through tour operators holding ATOLs are covered against the failure of their travel company. But those booking scheduled airlines direct through the internet or other methods have no such back-up unless they take out specific insurance.

The CAA figures show that the number of ATOL protected sales as a proportion of all air travel continues to fall, with only 56% or 28 million of a total of 50 million annual air travellers now covered. This represents a decline of 17% since 1998 when 25 million people were ATOL protected of the 34 million who flew.

The CAA’s ATOL Business report says: “This trend is likely to continue as consumers increasingly book travel independently rather than with ATOL protected travel organisers”.

The authority’s consumer protection group director Richard Jackson said that the proportion of air travel that is ATOL protected has been steadily falling since 1997 and looks set to continue.

He said: “Although the number of leisure passengers buying unprotected flights direct from airlines, particularly those on the no-frills sector, continues to increase substantially, the ATOL scheme still provides the largest UK holiday protection scheme and the only one for air holidays.”

But Jackson warned: “Unless changes are made to the ATOL protection scheme, the vast majority of air travellers will be left unprotected.”

The CAA’s latest statistics show a marginal rise in ATOL protected holiday and flight sales of just 1.6% to 28.3 million in the year to March 2005 but at the same time ATOL-protected scheduled sales fell by almost 4%.  The 28.3 million holidays and flights sold were valued at £14.1 billion, giving an average price of £498.

The CAA also reveals the massive growth of online specialists, with Expedia more than doubling its ATOL carryings to 582,457 in the 12 months to March. Collectively Expedia, Destination Group, Flightbookers and Travelocity showed a 95% increase on the previous year’s carryings while the big four traditional tour operators, TUI UK, First Choice, Thomas Cook and MyTravel, reduced in total by 5.7%. The big four groups’ share of the market has dropped to 46% – the lowest level since January 1998.

Almost half the top 40 travel organisers have cut capacity for this year although Expedia’s licensed capacity has soared by 300% in two years and Freedom Flights by 274% over the same period.

There are now more than 2,335 travel companies holding ATOLs, against 2,009 at the same time last year. This reflects the take up of new Small Business ATOLs – now accounting for nearly 1,000 firms – and third party licensing agreements.

Report by Phil Davies