THE Air Travel Trust fund that backs up the ATOL-bonding system is in record deficit after the worst 12 months for failures in a decade.
Twenty-five travel companies went into liquidation in the year to the end of March, compared with 14 in the previous year, and 11 led to calls on the fund seven more than last year.
The pay-outs exceeded £4.6 million, £4 million up on 2004/05 and the biggest rise in 10 years, taking the fund’s deficit from £10.6 million to £15.8 million including interest.
The biggest failure was Cruise Promotions, which went under with sister company Cruise Control last October. It accounted for £3.1 million of the outlay.
Trust chairman Roger Mountford noted a “significant increase” in failures, but Civil Aviation Authority consumer protection group deputy director David Moesli said: “I wouldn’t read too much into the numbers after one year.”
The fund has been in deficit since the early 1990s, but another year like the last could see it bust the Government’s guaranteed credit facility of £21 million. Moesli said the Department for Transport was poised to extend the borrowing limit.
The CAA has issued formal demands in five cases of suspected overtrading the most since the requirement company directors provide trading guarantees was introduced in the late 1990s involving Cruise Promotions, Pleasurebeach, Action Travel, Onshine and Phileas Fogg.
The CAA has proposed bonding be replaced by a £1 consumer protection charge on ATOL flights and packages. The cash raised would first pay off the fund deficit.
Moesli said: “There is no decision on whether the Government wants to replace bonding. If it doesn’t, a levy would be introduced to replenish the fund.”
A Consumer Protection Charge is unlikely to be in place before March 2008.