The Association of Independent Tour Operators is urging the government to ensure Air Passenger Duty is refunded to XL Leisure Group customers who have booked holidays direct with the collapsed company.

Direct customers of XL  – who were not covered by ATOL –  have paid around £1 million in APD for flights that they will not now be able to take, said the association.

AITO chairman Derek Moore said of the 200,000 advance bookings, around 80,000 were likely to be flight-only.

“If you simply take the minimum APD payment of £10 per person, that’s a massive £800,000 that XL’s administrators, Kroll, is sitting on.  The likelihood is that it’s closer to £1 million in advance tax collected by XL for the government. It’s a £1 million windfall for the administrators of a failed company and we don’t believe this is right.

“The XL collapse has demonstrated clearly the many loopholes that exist in financial protection for consumers – and this is another one. Tax collected by the airlines should be ring-fenced in some way to ensure it doesn’t simply get absorbed into the financial mess created by a failed company.”

It is unrealistic to expect consumers to understand complex travel industry rules and regulations, added Moore. 

“The only sensible way forward is to rationalise the rules and to ensure that airlines are brought within the consumer protection remit of ATOL.  We shall be lobbying government on this front and on the APD issue.

“In such a volatile economic climate, the airlines can no longer claim to be impervious to potential collapse.”

Meanwhile, flight deal website has called for chancellor Alistair Darling to scrap APD. 

Chief executive Chris Cuddy said: “It will be a sad day indeed when flying becomes once again the preserve of the rich and only the affluent can afford to go abroad. APD creates a double whammy for ordinary working people who are not only prevented from flying to the sunshine but are forced to holiday domestically and endure the UK’s high prices.”