As hopes grow that the government will extend consumer financial protection in travel, Ian Taylor looks at nine ways the government could reform the current ATOL system.

1. Introduce universal protection, with a single system covering repatriation and refunds – regardless of carrier or booking method, whether seat-only, traditional package or ‘dynamic’. Could not apply to scheduled passengers from outside the UK, meaning a two-tier regime. Airlines would fight it

2. Establish universal protection with trust accounts and supplier-failure insurance alongside ATOL scheme

3. Move to universal cover for repatriation only, without refunds for advance bookings unless sold with ATOL protection or voluntary insurance cover

4. Extend ATOL protection on charters to all passengers regardless how booked

5. Leave ATOL system alone, but provide funds to publicise it – pressuring trade to match government funds and/or allowing Air Travel Trust fund to finance consumer publicity

6. Increase ATOL Protection Contribution to pay for above

7. Replace ATOL protection with supplier failure insurance, or scrap it without a replacement

8. Establish a new regulatory body, replacing the CAA consumer protection group. The Department for Transport has already announced
a review of the CAA’s role next year

9. Do nothing and await a European Commission review of the Package Travel Directive that should re-define the ‘package’

Industry views

“There is mileage in lobbying the government. The environment has changed – XL concentrated minds. We are arguing for universal protection for travellers.”
ABTA board member Steven Freudmann

“There are going to be more failures and businesses will lose money as a result. ATOL was not designed for component-based holidays and there is confusion as to what is covered. The Civil Aviation Authority should cover everything or hand it over to the insurance guys.”
Antony Martin, managing director, Rock Insurance

“The travel industry does not understand the cover. The CAA should cover the lot or scrap the ATOL.”
Matt Cheevers, managing director, Teletext Holidays

“The ATOL scheme gives a distinct advantage to weaker, less financially secure airlines. Due to our passenger numbers, our customers would pay a considerable share of funding to provide protection against other airlines’ bankruptcy.”
British Airways spokesman

“If the CAA wants to re-engage [on financial protection] we will. But the government did not want to know last time.”
Mike Carrivick, chief executive, Board of Airline Representatives UK