Hays Travel has reverted to selling dynamic packages without ATOL cover, making it the first major player to alter its business practice in the wake of the not-guilty verdict in the Travel Republic case.
Online travel agency Travel Republic and its director Kane Pirie were cleared of breaching ATOL regulations last week at Westminster Magistrates’ Court.
Industry observers say the ruling has paved the way for agents to sell separate components of a holiday at the same time without an ATOL licence – and Hays could be the first of many to change how it works.
Hays Travel managing director John Hays said the company had started paying the ATOL Protection Contribution while the case was ongoing – but stopped paying the levy on holidays sold as separate components as soon as the verdict was announced.
Hays Travel, which has 35 branches in the northeast, 300 homeworkers, and 160 Independence Group members, will only use ATOL-bonded suppliers for flight only. Customers continue to pay mandatory supplier failure insurance on dynamic packages at a cost of £5 per person.
Hays said: “The Travel Republic case has really positive implications for us. As a company, we need to comply with the Civil Aviation Authority (CAA) and ABTA, but we don’t want to pay additional taxes.”
The ruling will also help Hays Travel to be more competitive with traditional tour operators by putting separate components together, he said.
Hays said he would attempt to recover the money already paid to the CAA, but doubts he will receive a refund.
Association of ATOL Companies legal adviser Alan Bowen said once large agencies stopped paying the ATOL Protection Contribution, other agencies were likely to follow suit. He said: “People will think if the big guys have done it, then why don’t I?”
Some travel companies might take legal action against the CAA, according to Bowen. “I understand a number of people said they felt obliged to get an ATOL. Companies will say the CAA forced them into putting more money into their business and could take legal action. This is a very difficult situation for the CAA – it needs to take urgent action,” he said.
However, White Hart Associates senior partner Chris Photi said companies would have to prove they were coerced into taking an ATOL. “If I felt coerced, I would be looking at making a claim and perhaps seven, eight or nine such companies may look to take out a class action.”
The CAA was expected to announce whether it will appeal the judge’s decision this week.