HOPES for a quick ruling on the dispute over consumer protection between ABTA and the Civil Aviation Authority have been dashed, with TUI UK confirming it will reduce its ATOL cover and risk sending the system into free fall.
It was anticipated the Court of Appeal would rule this week before the summer recess but no ruling is now likely before October, meaning the Government will not make progress on a replacement for the failing ATOL scheme until later in the year.
The proposed Consumer Protection Charge (CPC), involving a £1 per person levy on holiday bookings, is likely to be delayed until 2008.
TUI UK managing director Peter Rothwell said the company was deciding “how far we move down the route” of reducing ATOL cover.
“It’s costly to the business and confusing to consumers,” he said. “We have options. The issue is coming to a head.
“It’s likely we’ll have some ATOL cover for the foreseeable future,” added Rothwell. “This is not about evading ATOLs. We support consumer protection, but we’re getting to the point where half the travelling public won’t be protected.”
Thomas Cook said it would make no significant change to its ATOL bonding until the Court of Appeal issues a ruling.
“Any changes would take a significant amount of time to prepare,” said a spokeswoman. Thomas Cook has previously suggested it would follow any move by TUI.
Federation of Tour Operators director-general Andy Cooper expects other members to hold fire.
“Operators might make some changes, but they will be reluctant to go too far until they know the court’s decision,” he said.
“However, it’s disappointing. A decision was crucial for the September ATOL renewals.”
He said the delay would take the industry further into “cowboy country”.
Tour operators must now decide on their ATOL renewals amid confusion over the extent of consumer protection, knowing an increasing amount of business is conducted without the costs of the licensing regime, and with a replacement system unlikely to be in place for two years.
Association of Independent Tour Operators director Noel Josephides said: “We won’t do anything until we know what is happening.”
Members of the CAA’s consumer protection group were unavailable for comment, but a spokesman said: “We will be discussing the adequacy of passenger authorisations with individual licence holders. They have legal requirements to meet.”
He conceded tour operators could get around the requirements, but said: “They will need to discuss it with us.”
The CAA had hoped for an early court decision, allowing the Government to move quickly on the CPC, with a formal consultation in September and a scheme in place for September 2007. It concedes that target is in jeopardy.