The Civil Aviation Authority has demanded new package holiday firm Jet2holidays.com remove any mention of ATOL from its website.
Jet2holidays.com launched last week selling packaged breaks made up of Jet2.com’s flights and On Holiday Group’s accommodation.
The CAA believes the airline, the principal in the joint venture, is the first to sell packages while using an exemption in ATOL law for airlines selling seats on its own aircraft.
Instead, the operator is fully insured by Contractors Bonding Limited in New Zealand.
Jet2holidays.com stated its package holidays are like traditional packages covered by ATOL and offer equal consumer protection.
However, the CAA claims the mention of ATOL could mislead customers.
On Holiday Group chief executive Steve Endacott said: “The CAA is being pernickety.”