The latest round of Atol renewals that are due to be announced today are not expected to see any significant casualties as the Air Travel Trust Fund looks to renew its insurance cover.
Travel Weekly understands scrutiny of the 50 largest holders by Chartis Insurance, formerly AIG, that provides emergency cover for the fund that backs Atol, has not unearthed any major issues and renewal of the £250 million policy is likely to proceed next month.
While industry sources say some firms have struggled with their renewals this Spring, the CAA is unlikely to want to see any major failures now before the insurance situation is resolved and has been nursing firms through.
Alan Bowen, legal advisor to the Association of Atol Companies said: “I would hope that the renewals will be relatively straight forward. Last year’s season was not bad, therefore the accounts of firms that have gone in won’t be too bad.
“I think the real problem going forward is we have all seen cash flow slow in the last few weeks. We have seen a spike in demand for Easter but lower prices and there is an awful lot of capacity left in the family market for July and August. I would not bet my house on there not being failures in the next couple of months.
“In last year’s peak season both Goldtrail [Holidays] and Kiss Flights failed, for very different reasons. I think this year the danger is unless cash flow improves soon we will see failures before the peak season.”
Bowen said Chartis had written to the largest 50 Atol holders ahead of renewing the insurance and “as far as I know they have not found any particular problems”.
He added: “It would not help if there was a big failure tomorrow.”
The list of who has successfully renewed their Atol licence is traditionally published today, along with those who have chosen not to. A further list of firms that have not met the deadline is expected to be made public within weeks.
The original AIG deal was controversial as the ATTF had hoped to attract a number of insurers to provide cover, but only US giant AIG expressed an interest. Insurance industry insiders claimed at the time AIG did not have a good reputation for paying out on claims.
The US government bailed out AIG for a total of $180 billion to prevent it collapsing in 2009. Its UK division was renamed Chartis and, although officially seperated from AIG, remains 100% owned by the embattled company.