Flight-plus Atol reforms are facing a race against time if they are to be in place by next January as planned and they may bring only a third of the number of holidays under the scheme as previously hoped.
A 12 week government consultation is due to start at the beginning of next month meaning, due to the long parliamentary summer recess, it is unlikely to be before October that the new laws can be put before MPs in parliament and then they face six week period before being approved.
Association of Atol Companies legal advisor Alan Bowen said assuming there were no objections that might cause delays this would leave just a matter of weeks for the new rules to be enacted and he doubted there would be enough time with such a tight timescale.
The flight-plus change is designed to extend the reach of the consumer protection Atol scheme to bring in previously unprotected holidays and to help pay off the £30 million Air Travel Trust Fund overdraft more quickly, but yesterday Richard Jackson, the CAA’s director of consumer protection, admitted estimates of how many holidays it will capture could be as low as two million.
The industry has to date been working on the basis of a figure of six million but that is now thought to be very much at the upper end of what is likely at best and a wild over-estimate at worst.
Jackson admitted the CAA itself was working on the basis of industry figures. “We have had estimates of two million to six million, it will probably be somewhere in the middle of those,” Jackson told an e-tid online discussion on Atol reform.
Other experts warned agents having to obtain a flight-plus Atol for the first time won’t necessarily avoid paying VAT as a tour operators under the TOMS arrangement and will not find it easy to exploit a loophole to avoid Atol by acting as agent for the consumer.
White Hart Associates senior partner Chris Photi said he thought it would be very difficult to claim to be acting as agent for the customer for face to face or telephone sales, but OTAs might be able to do this for web transactions.
Photi said it was still unclear about what would go on a fight-plus invoice and where this would leave the agent in relations to TOMS as far as Her Majesty’s Revenue and Customs is concerned. He said he believed any firm taking a commitment and therefore representing a potential risk would be considered as the principal by HMRC.
Malcolm Preston, PricewaterhouseCoopers’s global sustainability leader, said agents may find it difficult to change their reporting systems to adhere to the new flight-plus rules. “The system is going to have to capture different data in a different way. It may not be as easy as you think getting your system to report different data on a monthly or quarterly basis to the CAA.
“That then leads to traning and then there is the question of because you are in Atol whether you are not now under the PTRs (Package Travel Regulations). That issue becomes a bit blurred and strays into TOMS as well.”
Photi added: “If HMRC is getting the same amount of VAT under this system as the old structure it’s likely we can have some discussions with them and come to some sort of arrangement. We have to see what the proposal actually says.”
Abta chairman John McEwan said he thought the association would be able to agree on a scheme for members that would be both workable and affordable although he conceded that the association was a “broad church” with diverse views among members.
Plans for an Abta flight-plus trust scheme have not been welcomed by some of the association’s more powerful members, as Travel Weekly has previously reported.
“Because we have such a broad church we have different views and it won’t be easy to reconcile those views,” McEwan said. “We want to come up with a scheme we can work with and that’s acceptable to members. We have to do that in a way that’s transparent for the consumer and affordable for the industry.”