TUI Travel boss Dermot Blastland has predicted one million people could be affected by their travel company going bust this year and up to 100,000 could be stranded overseas.

The situation could be compounded by any increase in ATOL payments and ultimately make the scheme unsustainable, Blastland warned.

His dire predictions follow speculation by Thomas Cook group chief executive Manny Fontenla-Novoa that up to 15 companies will fail within three months.

Blastland said: “There is no doubt more travel companies will cease trading in the toughest market for many years. The focus should really be on the number of holidaymakers who are impacted.

“In my view up to 1,000,000 people will be affected by their travel provider going bust. Most will probably get their money back, but many more won’t.”

In a warning shot on the future of financial protection industry-wide, Blastland also fears any increase in ATOL protection contribution on protected holidays – predicted to rise from £1 to as much as £5 – could result in more tour operators depackaging products and consumers travelling unprotected. This year 20 million people are predicted to book unprotected travel arrangements.

He said: “If it does [rise], it will have the opposite of the desired effect. We believe this will mean some tour operators will de-package their products, resulting in more people making travel bookings without financial protection and putting thousands more holidaymakers’ money at risk.

“Eventually this could lead to such a small proportion of the market being covered under the ATOL scheme that it would become unsustainable.”

The result could be consumers becoming less confident in booking overseas holidays in tough climates and booking closer to departure.

The lack of any sign of government action to broaden the ATOL scheme industry-wide was also not helping create a feeling of security in the sector, he said.

TUI Travel’s latest research shows 96% of holidaymakers believe financial protection is important, 6% more than four months ago.