TUI UK has become the first company to set a deadline for scrapping its ATOL.
Chief executive Peter Rothwell said it could be ditched as early as this autumn, saving the company £8 million a year and signalling a sea-change in the way clients are protected.
TUI has already held talks with ABTA and is consulting the Civil Aviation Authority. The move follows January’s judicial review that gave the green light to dynamic packaging without ATOLs, and the Government’s rejection last year of a £1 levy on flights to fund consumer protection.
The levy proposal could be revived on Tuesday after a third reading of the Civil Aviation Bill in the House of Lords, but the airlines are opposed.
Rothwell said TUI would like to abandon ATOL protection entirely by September, and would restructure its health and safety department to look after customers.
“We’ve got to start challenging the ATOL ruling because it’s a complete nonsense,” he said. “It’s becoming a big problem both from the customer point of view and our point of view. “We have to take legal advice on what we do, as we can’t risk the business. However, it is one of the options open to us.”
Rothwell said it was not feasible to await the CAA’s appeal against the High Court ruling. The CAA won leave to appeal this week – a decision ABTA described as “disappointing” – and hopes for a verdict in July, before ATOL renewals in September.
“It could take several years for the CAA to sort this out and we’re not going to hang around,” said Rothwell.
Much of TUI’s £8 million in savings would come from no longer paying the ATOL fee, with the remainder made from restructuring the group’s health and safety department.
The CAA derives 3% of its £172 million annual turnover from ATOLs. Only 50% of holidaymakers enjoy ATOL-protection when they travel abroad these days, compared with 90% when the system was at its peak.
- TUI northern Europe reported a rise in turnover of 2.9% to £4.8 billion for the year to November 2005, with profits up 40% to £109 million. The UK accounts for 80% of the turnover.