Travel Republic and its director Kane Pirie have been found not guilty of breaching ATOL regulations.
At Westminister Magistrates Court on Tuesday, Judge Nichoas Evans also dismissed arguments that the Civil Aviation Authority (CAA) had brought the case in bad faith.
The charges brought by the CAA alleged Travel Republic and Pirie operated in such a way as to sell package holidays without either the necessary ATOL or as the agent of an ATOL holder.
The pursuit of Travel Republic was seen as a test case for the CAA in enforcing its view that virtually all holiday sales of flights plus accommodation require ATOL cover.
A CAA spokesperson said: “We undertook this prosecution following advice from independent counsel and with the aim of ensuring that holidaymakers receive the protection to which they are entitled.
“This is a very complex decision, and we will need to study the judgement fully, including considering whether an appeal is appropriate, before making a fuller statement.”
Welcoming the not-guilty verdict, Pirie said: “This confirms that it is perfectly legal to see more than one travel product at the same time. Travel Republic has always, and will always, act within the law, including the ATOL regulations, in their current, and any future form.”
“The whole process has been an expensive, unpleasant and gruelling diversion for the whole company and for me personally. I am now looking forward to being able to focus once again on driving the ongoing growth of the business.”