ATOL Call for Evidence

On 23 May 2013, the Department for Transport (DfT) launched a Call for Evidence as part of their review of the implementation and funding arrangements for the Air Travel Organisers’ Licensing (ATOL) system.

This Call for Evidence will run until 15 August 2013 and focusses attention on the financial protection arrangements for holidays, how they are funded, fundamental questions about licensing, and the organisation of the UK’s scheme of protection.

This Call for Evidence is part of the Government’s wider programme ATOL reform. They have listed their key objectives of the Call for Evidence as:

  • Putting the financial protection arrangements for the travel industry on a robust basis;
  • Deregulation, whilst also ensuring the industry takes more responsibility for protecting its own customers’ money;
  • Reducing the Government's financial exposure.

It is important to note that this review will also include the wider implementation and funding arrangements for the Package Travel Directive. The UK Package Travel Regulations, for which the Department for Business, Innovation and Skills (BIS) are responsible, implement the Directive. However, the ATOL Regulations are an important part of how the UK complies with the Package Travel Directive and this is why the two are being linked in this way.

Beyond this Call for Evidence, there is very little information about next steps and timing, although the DfT has indicated that the evidence gathered as part of this review will help to inform the Government’s negotiating position with the EU as relates to the Package Travel Directive. The document also makes clear that the Government will not decide what further reforms to make to the ATOL scheme until the future position with Package Travel Directive is clear.

This Call for Evidence is very important for the travel industry – it is an initial step in a consultation process that may eventually see fundamental changes to the way the ATOL scheme operates and is funded. This is also a very early step in the Government’s review process, and it is not yet asking industry for views on a definite proposals.  As with all changes to policy, it is important that the industry’s case is made early and made well. ABTA Member feedback is essential in shaping our response to Government.

ABTA is currently reviewing the Call for Evidence in detail. Once we have done so, we will be in touch with Members via an online survey explaining the key points within the DfT document, inviting you to submit your views on how it might affect your business. We will then host a number of workshops around the UK to give you the opportunity to discuss the key issues with us later in the summer, followed by a webinar for those unable to attend a face-to-face meeting.

ATOL Reform

The Air Travel Organisers’ Organising Licensing scheme (ATOL) was introduced by the Civil Aviation Authority in 1973 to provide financial protection for package holidays involving flights.

The ATOL scheme works by the payment of an ATOL Protection Contribution (APC), charged to consumers at the time of booking their travel, which funds the Air Travel Trust fund (ATTF) that is responsible for refunding consumers in the event of supplier insolvency.

However, major changes in the way people book their travel arrangements in the last 20 years has meant that the number of holidaymakers travelling on an ATOL protected holiday has fallen  significantly. A series of high-profile insolvencies in recent years has perpetuated consumer confusion, and a large ATTF deficit has developed. Recognising the need to address the declining number of consumers protected by ATOL, offer clarity to consumers, and set the ATTF on a sustainable financial footing, the Government announced their intention to reform the scheme in February 2011.

The Government laid out two clear objectives guiding their reform of the ATOL scheme; to increase the number of consumers protected by ATOL and to improve levels of consumer clarity regarding consumer protection and what is and is not protected by ATOL.

ABTA has been heavily involved throughout the reform of the ATOL scheme, holding a full Member consultation on the issue so that we could fully understand the views of our membership, and liaising closely with both the CAA and the Department for Transport (DfT) to ensure that the voice of ABTA’s Members has been heard at every stage of the process.

The main features of the ATOL reforms to date have been:

  • The introduction of the ‘Flight-Plus’ concept
  • The introduction of ATOL certificates
  • The increasing of the APC contributions, paid by consumers, to £2.50 per booking; this will decrease once the scheme is on a sustainable footing.

The new ATOL regulations came into force on 30 April, with full implementation phased over a period through 1 October 2012. The new regulations mean that organisers packaging together a flight and/or accommodation and other tourist services (i.e. car hire) now are classed as ‘Flight-Plus’ organisers and have to provide protection against supplier insolvency, and that when the conditions for ATOL coverage are met the consumer must be issued with an ATOL Certificate that tells them exactly what is protected. Together, these two initiatives will help to go some way to meeting the Government’s stated objectives.

However, ABTA has been clear in our conversations with government ministers, the CAA and the DfT that in order to fully meet the Government’s objectives on ATOL reform, holidays sold by airlines must be brought within the scope of the ATOL scheme.

The Department for Transport has been receptive to ABTA’s call for holidays sold by airlines to be brought within the scheme, and is likely to consult on this in 2013. However, in order to include airline holiday sales in ATOL, it is first necessary to pass legislation in Parliament empowering the Secretary of State to do this.

The Government included Section 94 within the recently published Civil Aviation Bill. The Bill is currently passing through the final stages of the Parliamentary process and is expected to receive Royal Assent early in 2013.

Once Section 94 becomes law, the Government is likely to consult on the inclusion of holidays sold by airlines within ATOL.

More Information

If you are an ABTA Member, we have produced a whole array of information materials that will help you implement the ATOL reforms, this includes guidance notes, model documents and comprehensive FAQs. Sign in to the Member Zone to access these resources.

For more information on ABTA's response to the ATOL Reform consultations, see our Resource Zone.

Department for Transport (DfT)

Civil Aviation Authority (CAA)