Government plans to extend financial protection for holidaymakers came in for fierce criticism yesterday from a central figure in travel trade financial arrangements.
Leading industry accountant Chris Photi called the proposed new flight-plus Atol “a fudge” and Civil Aviation Authority (CAA) bonding requirements “an abomination”. He suggested the government’s only motivation for the change was “to get the CAA off its case” because: “The Air Travel Trust Fund has a £30-million hole.”
The Department for Transport has proposed a new flight-plus Atol licence to extend financial protection to dynamically packaged holidays. This will add a £2.50 charge, the Atol Protection Contribution (APC), to bookings. A consultation is due to start in May, with the new arrangements set to be approved towards the end of the year.
Photi, a partner at White Hart Associates, told a Grant Thornton industry seminar on Atol reform yesterday: “Where is the flight-plus Atol for airlines [and] for click-through sales? Where is the synchronisation with the Package Travel Regulations?”
He said: “This represents a major change for online travel retailers. It is not a level playing field. I don’t know why the competition agencies are not more interested. The airlines take more people out of the country. The risk seems to be in the flight element [of holidays].”
Describing the CAA rule that companies applying for an Atol for the first time must provide a bond for four years, Photi added: “It can’t be fair to have to pay £2.50 and provide a bond. That has to be anti-competitive.”
He suggested: “The next time the big two companies [Tui Travel and Thomas Cook] complain about the cost of Atol protection, remind them that £10 million a year goes in indemnity to insurers against a £250-million failure that could only involve one of two companies.”
Photi warned companies would struggle to meet the bonding requirements and to find supplier failure insurance, saying: “There is a paucity of bonding in the marketplace [and] only two insurers in the area of supplier failure – that is not much competition.”
He said there “could be failures off the back” of the reforms, and he warned: “People will look at ways of circumnavigating the regulations. Click-through sales could be one way to avoid them.
“Another could be selling as an agent of the consumer by saying, ‘we are acting as your agent and will swipe your credit card [to pay for a flight]’. So long as the terms and conditions are clear, you could do that on a website.”
Photi was also critical of travel association Abta. He asked: “Does Abta know what its role is in relation to this? Abta is ostensibly the voice of the travel industry, but it has such a range of members. Many want flight plus, many do not. How can it lobby the government when it does not know what to say?”