Fear of a major insolvency in the travel industry is driving the government to push ahead with Atol reform, transport minister Theresa Villiers has told MPs.
Appearing before the Transport Select Committee on Wednesday, Villiers said: “There are many consumers not protected who should be and we cannot preclude the possibility of a major insolvency.”
Villiers announced the biggest changes to the Atol consumer protection scheme in decades this month, meaning up to 1,900 previously unlicensed travel businesses require a new Flight-Plus licence from April 30.
She told MPs: “The desire to keep up the pace of change is about the concern there might be a major insolvency.
“There have been well-publicised insolvencies in the travel trade and people’s incomes are under pressure. We should try to extend the level of protection at a time when people can ill afford to lose several hundred pounds on a holiday booking.”
Villiers denied that a £42-million deficit in the Air Travel Trust fund that pays out to consumers if a licensed company fails was the prime motive for the changes, which should increase licence income by extending the scheme.
She said: “One of the consequences of the changes is that the fund will become self-sustaining rather than supported by taxpayers. It is a useful consequence, but it is not the primary driving factor.”