A government consultation on raising the consumer-protection levy has been delayed by at least a month as the Civil Aviation Authority studies an ABTA proposal to bring five million more holidays into the scheme.

The CAA planned to commence a six-week consultation on increasing the £1 ATOL Protection Contribution this month. But the industry will not see the consultation document until mid or late April, amid fears the Department for Transport could increase APC to as much as £3 per booking from October.

ABTA has produced a counter proposal to widen the ATOL scheme, bringing in companies currently trading outside. It hopes this will form part of the consultation.

Association head of development Andy Cooper said: “This is about widening who pays APC. How wide remains to be debated. My personal estimate is five million seats could be brought in. The CAA is thinking about the proposal.”

Details have yet to be worked out and Cooper conceded there are potential difficulties. “There is not good information on the size of the [dynamic-packaging] market and there could be additional risks [of company failure],” he said.

But ABTA’s biggest members are in no mood to stomach an APC increase. Cooper warned: “TUI Travel and Thomas Cook could say ‘why should we incur this additional cost’, remove their flight-only [from ATOL cover] and look at de-packaging.”

The consultation delay will leave the DfT with a tight timetable if it intends to increase APC from October as previously indicated by the CAA. The consultation will not end until June and transport secretary Geoff Hoon must announce any change by early September. However a CAA spokesman said: “The rise could still come in October.”

Cooper queried that deadline, saying: “It is a point for consultation in itself. The government is driving the deadline. But why shouldn’t it give an additional guarantee [to the overdrawn Air Travel Trust fund]? It has guaranteed billions to the banks.”

In an associated development, Travel Republic director Kane Pirie appeared at Westminster Magistrates Court yesterday charged of breaching the ATOL regulations – a case that will test the CAA’s interpretation of the law.