The Civil Aviation Authority met with ABTA in the Court of Appeal this week as the row over ATOL cover for dynamic packages continues.
Civil Aviation Authority guidance to agents, issued in March 2005, stated that sales of dynamic packages need ATOL cover. ABTA made a legal challenge and a High Court Judicial Review found in its favour in January.
Acting for ABTA, Charles Haddon-Cave QC told the court the Civil Aviation Authority’s appeal would determine whether a majority of independent agents continue to operate.
“If the CAA case is upheld, it will destroy a large proportion of high-street business and may destroy large numbers of agents. There would be no way someone could walk into a travel agent and buy two travel items without it being a package. All that business would go out of the window.”
But Michael Crane QC for the CAA argued: “This is far from a battle between the industry and the regulator. The industry is divided and there is support for the CAA position.”
Crane added: “The guidance was an attempt to assist the industry. If it’s wrong in law, the CAA needs clarification to know how to regulate.”
It is the CAA’s belief, he said, that: “Once you have the sale of a combination of elements [including a flight] and a price that covers the lot, you have a package.”
He argued ABTA had conceded a holiday tailor-made by a tour operator, quoted at an inclusive price with some elements itemised, was a package. Yet a tailor-made itinerary put together by an agent did not, when the nature of transactions was the same.
But Haddon-Cave said: “The CAA has not understood the nature of the business carried out by most of the travel industry.”
He warned: “High-street agents will find themselves liable for not having an ATOL, and liable for any fault at a hotel, when all they have done is book a flight and accommodation at the request of a customer.”
Scottish Passenger Agents Association president Sandy MacPherson said: “ABTA is fighting to allow retail agents to carry on doing what they do. The outcome is fundamental to the future of high-street agents. A CAA victory would lead to a change in how agents do business.”
However, new ABTA board member Noel Josephides said: “It will dilute public financial protection and mean anyone can short-change the system. The public will go for the security of big companies, and crooks will take advantage.”
Josephides, director of the Association of Independent Tour Operators, added: “It’s rubbish to say agents will be driven out of business. It’s easy to get a small company ATOL. It costs less than to bond with ABTA.”
A ruling is expected by the end of July.