The Air Travel Trust fund (ATT) has warned it may not refund customers who booked their flight as part of an non-ATOL protected dynamic package in the event of a supplier failure.
The ATT fund accrues holidaymakers’ ATOL Protection Contributions (APC), and stands behind the ATOL scheme. Its primary function is to protect consumers in the event of a tour operator going out of business. The fund will also be used to refund passengers with forward bookings and repatriate passengers stranded abroad.
In a statement following the collapse of seat-only operator Custom Flights, the ATT said travel agents who sell flights in combination with hotels or other travel services without an ATOL licence were acting “unlawfully”.
In future, the ATT may refer customers back to these agents to claim their refund when a supplier goes under.
It said: “The trustees (of the ATT) wish to ensure the continued integrity of the ATOL arrangements and do not believe it is appropriate for the ATOL holders who correctly protected their customers to see the APC funds they have collected used to refund claims which, in the trustees’ view, relate to an unlawful transaction.”
The ATT is speaking to its legal advisors and will issue a statement if the policy changes.
Meanwhile, the ATT has agreed to refund Custom Flights customers who bought a holiday from an agent it considers to have sold an “illegal package,” in an effort to help customers avoid “delay and potential costs”. The ATT will later take action to recover the funds from agents.
The move follows the Civil Aviation Authority (CAA) defeat in a case brought against online travel agency Travel Republic and its director Kane Pirie. The judge in the case found both not guilty of breaching ATOL regulations – a verdict the CAA is appealing.
Following the verdict, industry observers have predicted fewer travel companies will operate within the ATOL regulations and opt for insurance-based cover instead.