The Civil Aviation Authority has proposed a £1 consumer protection charge to pay off the Air Travel Trust Fund’s £15.5 million deficit and allow it to reform ATOL bonding.
ATOL holders would collect the £1 levy at the point of sale to help build up a £250 million fund that would pay for consumer refunds and repatriation if ATOL companies go bust.
CAA Consumer Protection Group director Richard Jackson said the charge would stay in place for up to four years to replenish the ATTF, but may remain in place for a longer period if the Government accepts the CAA’s recommendation that a separate fund is built up to enable ATOL bonds to be scrapped.
He said there is scope within the Civil Aviation Bill for both proposals to be introduced without the need for new primary legislation.
“If bonding is removed, there is considerable scope to simplify ATOL but at the same time it is vital we ensure there are sufficient safeguards in place to prevent any disproportionate increase in the costs of failure, which will be met by the new fund,” Jackson said.
These safeguards are likely to include the requirement that new ATOL holders provide financial guarantees to the CAA of £40,000 for up to four years.
The travel industry has until May 19 to respond to this latest consultation paper before the CAA begins a regulatory impact assessment in summer.
If agreed, Jackson forsees the changes coming into force from September 20.
Jacobs Media is honoured to be the recipient of the 2020 Queen's Award for Enterprise.
The highest official awards for UK businesses since being established by royal warrant in 1965. Read more.