Leading industry accountant Chris Photi warned of “more failures” today as he branded the Package Travel Regulations “penal”, the CAA as “control freaks” and Abta and the CAA as “intransigent”.
Photi, head of travel and leisure at White Hart Associates, hit out at the industry regulators accusing the CAA of causing “paralysis by analysis” and said a move to trust accounts was inevitable “possibly for the whole industry”.
He told a Barclays Travel Industry ‘State of the Nation’ webcast: “Many large operators have seen the CAA appetite for trust accounts increase.
“You will see this become more and more prevalent because there are so few alternatives. The Air Travel Trust fund has no money in it. The government is standing surety for the fund.
“If there is no bonding, no financial failure insurance and no other supplier failure insurance, where can a travel business go? The Package Travel Regulations [PTRs] give only one alternative – the trust model.”
Photi insisted: “The CAA is looking at moving large Atol-holders, possibly the whole industry, to trust accounts.
“The travel industry is fast approaching a situation where it will have little other alternative to provide consumer protection.”
He argued: “There has to be a rebalancing of the Atol regime. The Package Travel Regulations [PTRs] are onerous. They are penal.
“Don’t forget they were driven most strongly in Europe by the UK – by Abta and the CAA.
“The PTRs were not designed for the Covid pandemic. But there is intransigence in the attitude of the CAA, Abta and the Competition and Markets Authority (CMA). This isn’t a sustainable approach.”
Photi warned: “There are going to be more failures. You can only kick the can so far.”
He said: “Those of you who have been dealing with the CAA in the last eight months can see the CAA’s resources are stretched. It is also mindful of the Air Travel Trust fund. Thomas Cook cost the fund in excess of £500 million.”
Photi argued: “What we saw in the September Atol renewals was some companies having three or four what are called ‘circuit breakers’ in a licence period.
“The CAA gives you a limited-period licence and then comes back and seeks a complete update on your financials. If they are satisfied, they shovel it on for another three months.
“Having to continually engage with the CAA is taxing when there are other demands on your time. It’s about control – the CAA have always been control freaks.
“The CAA needs to be careful of paralysis by analysis.”
Photi conceded: “The CAA has taken a pragmatic view on debt funding.” But he said: “The CAA is not showing any great desire to reduce its liquidity tests.”
He argued: “The question is have you raised enough? In the September renewals, a number of Atol holders raised additional capital to satisfy the CAA.
“We’re urging all our clients to look to their March or September renewal and run the Atol self-assessment test to see if the funding raised is sufficient to get through that renewal. Don’t lose the opportunity to use this government support.”