The Department for Transport is poised to unveil detailed proposals for Atol reform, introducing a new ‘flight-plus’ Atol for high-street and online retailers that will change the way travel agents do business.

From January next year, agencies will find it near impossible to sell a ‘dynamic package’ of separate flights and accommodation without Atol protection and adding a £2.50 charge per person to each booking.

All agents needing an Atol for the first time will have to provide a bond or pay all income from ‘flight-plus’ sales into a trust account. Both options cost money, but a bond could prove too expensive for most.

The Civil Aviation Authority (CAA) expects many retailers to switch to trust arrangements similar to those offered by the TTA/Worldchoice consortium. That means setting up an account overseen by independent trustees to hold all revenue from flight-plus sales immediately upon receipt – including agency commission.

The money must remain in the account until clients complete their holidays, an issue for many agents as this would defer their flow of cash, something many agents rely on.

in addition agents will be required to issue a single-page invoice and new Atol Certificate using a form of words such as: “Your flight is sold by us as an agent for X. Your accommodation is sold by us as an agent for Y. Your transfer is sold by us as an agent for Z.”

Retailers who do not use a trust account risk a huge bill to refund, re-book or repatriate clients if an airline fails unless they have supplier failure insurance. Arrangements around package holidays will not change, and seat-only sales of charter carriers will continue to require Atol cover as now.

‘Click-through sales’, where a customer buys a flight online and clicks a link to another site for accommodation, will remain outside Atol protection for the time being. The government is keen to see these brought into the scheme, but recognises this would require legislation.

Trade association Abta is also pushing for an answer to the issue of click throughs and is likely to be unhappy today’s expected announcement will not include definitive proposals on this, but will be reassured that at least the government has the issue in its sights.  

Overall, the changes will extend protection to up to five million bookings that currently go unprotected each year. Those in the trade who object have only a three-month consultation to attempt to force through modifications.