The reform of ATOL bonding should include a £1 contribution, according to a joint industry and Government body.

The Air Travel Insolvency Protection Advisory Committee, set up to examine financial protection of flights, said the Government should introduce a £1 ATOL Protection Contribution to reduce costs and ease the regulatory burden for the travel industry.

The Committee also said that the £1 contribution would help educate the travelling public about the benefits of financial protection and the travel products that are protected.

ATIPAC chairman John Cox said: “The past year has seen a further decline in the number of air travellers who are financially protected and there is still confusion among consumers about whether or not their flights and holidays are protected.

“The introduction of APC would be a golden opportunity to increase consumer awareness about when products are financially protected by having clear statements on advertising and invoices.”

In its report, ATIPAC found that in the year ending March 31 2007, 27 ATOL-holding travel companies collapsed, two more than in the previous year.