Threat to ATOL levy

The Association of Independent Tour Operators has threatened to challenge a proposed levy on ATOL passengers unless it is underwritten by the Government.

The threat comes just days after the Civil Aviation Authority began a six-month probe into proposed alternatives to the ATOL scheme, described by transport minister Karen Buck as “burdensome and bureaucratic”.

Options under consideration include letting ATOL holders pay their bonds in arrears or passing on a small levy to consumers as a stripped-out passenger protection charge.

However, if the authorities decide to introduce a levy on ATOL company passengers and scrap bonds, AITO, which backs the levy idea, wants the government to underwrite the fund to the tune of £250 million.

If not, it is already threatening to appeal to the European Parliament. AITO industry affairs council member Noel Josephides said: “The next stage for us is to go to Europe and say the UK Government is walking away from its responsibilities.”

He said industry experts claim it may take a decade to raise enough cash through a passenger levy to cover several large operator failures.

However, Federation of Tour Operators director-general Andy Cooper is unconvinced a levy on ATOL passengers is the solution.

Cooper agreed it will take time to build up enough money to be effective, but questioned whether replacing the ATOL bonding scheme with another system that needs constant monitoring will “actually address this regulatory burden issue”.

Association of ATOL Companies chairman David Mortimer claimed an all-encompassing protection insurance fee on all travellers is the way forward.