The Civil Aviation Authority (CAA) has indicated that repatriation and consumer financial protection could be separated in future manifestations of the Atol rules.
Speaking at Tuesday’s Barclays Travel Forum Richard Jackson, group director consumer protection group, suggested trade bodies might one day take on the financial protection role themselves.
The Atol scheme is currently backed by the Air Travel Trust Fund (ATTF) which, due to hefty payouts following a string of failures, is £30 to £35 million in the red, said Jackson.
“You have to look at things like the government running trusts. Do we actually want to run something which at the end of the day is taking cash out of an industry that has trouble managing cash?”
Jackson said the long-term question for the industry was whether it wanted to be bound together in a compulsory government scheme or band together as groups to offer protection. “The government is probably more interested in repatriation,” he said.
John Hays, Hays Travel managing director, said past debates about Atol conflated the separate issues of repatriation and financial protection and that had been unhelpful.
“The government wants to avoid mass strandings abroad and then there is financial protection. I feel there has been a lot of muddled thinking between the two. We could have done a better job of distinguishing between the two.”
Hays Travel has been confirmed as one of the four accredited bodies for Flight-Plus meaning it has taken on some of the Atol governance on behalf of the CAA.
The CAA hopes this model will enable it to reduce its regulatory role although Hays said the way the regulations have been drafted presents challenges to organisations like his.
“From the outset the CAA indicated they struggle to monitor the number of agents out there and wanted to work with the trade to actually do a lot of the due diligence and take on a lot of the risk.
“One of the real concerns we have, and the reason why there are so few accredited bodies, is the legislation is drafted very widely indeed.
“Our concern is not around the bit of the accredited body member that we can see – the Flight-Plus bit – it’s the bits that the accredited body member does outside of Flight-Plus. The way the legislation is drafted we are responsible for everything they do.
“We have 17 years experience managing risk of agents through the Independence Group so we feel we have the expertise to do this effectively.”
Once the ATTF deficit is paid off, the Atol scheme is likely to undergo an overhaul amid questions about how large a surplus is acceptable from collections of the £2.50 per person APC charge.
The industry is expecting further changes to the legislation before that time, however, to bring airline sales of holidays into the scheme and ultimately all airline sales.
A review of the European Package Travel Directive is underway and this will help mould the changes to UK law although is not expected to be competed for some time.
Hays said: “I have been a consistent supporter of Flight-Plus but only on the condition that it’s a first step of the longer term objective of the genuine level playing field.
“Clearly we do not have that at the moment and we need to get the legislation in to make it consistent.”
Jackson reminded the audience that it was the CAA that suggested a £1 all-flights levy in 2005, a change narrowly defeated in parliament but one that retains widespread support in the trade. A snap poll at the forum, attended by around 250 travel industry guests, found 84% were in favour of an all-flights levy.