The boss of online travel agency Travel Republic has lambasted the proposed changes to the Atol consumer protection regime.

Kane Pirie, an Abta board member who famously won a long-running legal battle with the CAA after it accused the retailer of breaching Atol rules said agents should oppose the changes.

He said it was unfair that agents with customers who choose not to book a package holiday should now be expected to bail out a scheme that has been poorly run leading to a £50 million defcit.

He called the proposal a new tax on holidays that will outlaw the business models of any UK travel agencies.

Pirie said: “So much for the coalition helping private sector growth by reducing regulatory burden. “The proposal to treat separate flight and hotel bookings as if they were a single package booking makes no sense.

“The driver for this is that the existing scheme to cover package holidays has not been well run, and is estimated to be over £50 million in the red. A combination of poor risk assessment by the CAA and low premiums charged to the tour operators has resulted in fund outgoings massively exceeding income.

“The tour operators have successfully lobbied for this deficit, which by rights belongs to them, to be cleared by a new holiday tax on their competition’s customers.

“Good for them, but how can it be fair that customers who choose not to book package holidays with tour operators pick up their multi-million pound hangover?

“The changes will also in effect outlaw the business model of the UK’s many travel agents who will be asked for the first time to accept responsibility for the failure of airlines and other travel providers.

“The full cost of complying with the new regulation will render the business model of many uneconomic leading to significant job losses.

“Travel agents need to wake up and speak up to avoid getting mugged under the new rules. The cloak of convenience is consumer protection but customers already have good cover against the failure of their holiday provider through the protection on card payments (both debit and credit).

“In addition, Travel Republic operates a broad financial protection scheme covering customers, including those who book just a flight, against insolvency risk.

“This is important as surprisingly the airlines, who coincidentally also have powerful lobbying connections, will remain completely outside the scheme under the proposals announced yesterday.

“This alone evidences the changes are not about consumer protection – one outcome could well be more customers choosing to book directly with airlines with no cover.”