ABTA will challenge Civil Aviation Authority plans to raise the ATOL levy on holidays to £3 from October, but is resigned to a hefty increase.

In a consultation response to be submitted on Friday, ABTA says the CAA has miscalculated both the cost of XL Leisure’s collapse in putting the total bill for refunds at £65 million, and the draw on the Air Travel Trust fund at £37 million.

It suggests the CAA has wildly over-estimated the number of claims still to come in, while under-estimating the volume of claims directed to credit card companies. Together, these may have inflated the estimated cost to the fund by as much as £20 million.

ABTA head of development and Federation of Tour Operators secretary-general Andy Cooper said: “The CAA assumes a further 16,000 claims are to come nine months after the failure. Where are they going to come from?”

Speaking in Dubai on Monday, Cooper expressed frustration at not seeing the figures under-lying the CAA forecasts, and said: “It is difficult for ATOL-holders to keep faith in the credibility of the regulator.” He added: “The cynic in me says the £3 increase is a done deal.”

XL’s failure and a downturn in ATOL Protection Contribution  receipts will technically bankrupt the consumer protection fund from October. ABTA contends the government and Barclays should extend the existing £60 million credit facility underwritten.

Cooper said: “The difference between the current £1 and £3 is the difference between £6 million and £18 million a year to TUI Travel or Thomas Cook, and they cannot recover this on pricing. We either lie down and get kicked in the face, or we challenge it.”

New transport secretary Lord Adonis will rule on the increase this summer.

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