Cost of flight-plus will depend on CAA risk assessment

The costs to travel retailers of extending Atol consumer protection will vary according to how risky the Civil Aviation Authority judges companies to be.

CAA consumer protection group deputy director David Moesli told Travel Weekly: “The financial criteria will vary across different businesses.”

Many companies will be required to hold an Air Travel Organisers’ Licence (Atol) for the first time next year under changes to the system announced on Thursday, and new Atol-holders have to provide a bond for their first four years of trading or make alternative trust arrangements. Both options cost money, and the price of bonding has risen sharply since the financial crisis of 2008.

Moesli said: “We have to assess the risk of failure. There should be principals in place in the case of flight-plus arrangements who would still produce the holiday components a consumer has paid for [in the event of a failure], so people would still be able to travel.”

This should mean that, in most cases, the failure of a flight-plus Atol holder leads to a minimal draw on the Air Travel Trust Fund which finances refunds and repatriation when a company ceases trading.

Moesli said: “We can’t say there would be no calls at all on the Air Travel Trust Fund. But [the financial criteria] will depend on the model of each company and the arrangements they have with their principals.

“It comes back to the question of risk in a business. If a company can demonstrate it has been in business a long time and can demonstrate it is low risk, we will take that into account. If a company operates a more risky model, we will need to understand the risks we are running and the risks to passengers.”

The costs are likely to be commensurate with the size of the company and its turnover. Moesli said: “We are looking at what to do for smaller businesses, but first we have to establish the risks. We have to ensure the way we go is fair and equitable to all companies in the travel industry, including established players who want a level playing field.”

The CAA points out bonding and trust arrangements are only two of the options open to new Atol holders to provide financial guarantees. They could also be licensed under a franchise arrangement or buy appropriate insurance.

Moesli added: “All will become clearer when the full consultation document is issued later in the year.”

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