The extension of the Atol scheme announced last week amounts to the biggest upheaval in holiday financial protection in years.
Retailers selling separate flights, rooms, transfers and car hire as part of a single holiday will need the cover of a flight-plus Atol – held either by their company or by the agency group of which they are a member.
The announcement by aviation minister Theresa Villiers was light on detail and we won’t know more until the release of a consultation document, probably in May. But here are 10 points that we do know:
1. Flight-plus sales
These involve a flight and one or more holiday components sold at the same time or “within a day” of each other. This will mean at the end of the next working day – or closing time next day for a high street agent and midnight for online players.
2. Flight-only sales
The Atol requirements will remain as now, with cover required for most third-party sales but not for seats booked direct. Scheduled airlines remain outside the scheme and that won’t change unless Brussels acts.
3 ‘Click-throughs’
Sales when a consumer buys a flight on an airline website and is offered a link to buy accommodation are not included. The government “may” legislate on this later in the year. Abta hoped for more.
4. Financial guarantees
Flight-plus Atol holders who have not held a licence before will need to arrange a bond (like an operator), or pay customers’ money into a trust account until holidays are taken, or provide insurance against failure. This will increase their costs in proportion to the amount of flight-plus business they do. Advantage is preparing to offer trust arrangements and Abta is looking at doing this.
5. Bonds
These will be set as a proportion of relevant business, so a company with a £4 million turnover and £500,000 in flight-plus sales might need a bond worth 10%-15% of £500,000 for the first year of Atol cover, three-quarters of that for the second and so on. The bond will fall to zero over four years. The cost of a bond is typically 4%-5% of its value.
6. £2.50 per person on prices
Flight-plus Atol holders will have to add the £2.50 Atol Protection Contribution (APC) to bookings and pay it to the Air Travel Trust Fund, plus admin costs on top. Big companies pay monthly, others quarterly and the smallest annually. The charge will stay at £2.50 until 2014, provided there are no big failures.
7. Start date
The changes will come in time to cover the peak 2012 booking period, probably by next January.
8. Atol Certificate
A standard document to be issued to every customer buying a protected holiday will be introduced. Companies will be in breach of regulations if they fail to issue the certificate at the time of booking or give wrong details.
9. Enforcement against ‘misleading customers’
The government promises sharper enforcement of regulations where companies declare themselves the “agent of the customer” rather than an agent of suppliers. Villiers says some companies are “misleading customers”. The CAA says: “We’ll tell people exactly what they can and cannot do.”
10. If a supplier fails
Flight-plus Atol holders will pick up the cost of rebooking or refunding a client if an airline or other supplier fails. The CAA says: “If an Atol holder’s supplier becomes insolvent, the Atol holder is required to provide the customer with a replacement or with a refund. Flight-plus Atol holders are required to provide this protection.”
If you feel strongly about consumer protection, add your voice to the flight plus debate. We’ll pass the comments posted to our Atol Forum on to Abta’s working party as they develop a response to CAA proposals.