The Civil Aviation Authority has launched a legal investigation into Lowcostholidays’ move to become wholly registered in Majorca.

The authority has warned customers booking with the company that their bookings may not be protected, and if they are, that protection could be “extremely limited”.

The CAA said it had “serious concerns about the risks posed to consumers by Lowcostholidays’ conduct” and is using its legal powers to gather more information to “protect consumers from being misled”.

The authority’s advice follows Lowcostholidays’ move to Majorca on November 1. At the time, Lowcost boss Paul Evans said customers would continue to be protected.

The CAA said in a statement: “The move means bookings now made on their website are not protected by Atol.

“The company claims bookings are voluntarily protected under the Spanish financial protection system, but the CAA’s legal view is that even if the bookings are accepted under the Spanish system, the value of the protection offered is extremely limited.”

Andrew Haines, chief executive of the CAA, said: “Consumers have the right to be treated fairly and given clear information about how their booking is financially protected.

“Lowcostholidays hasn’t done either and is still leaving consumers in the dark about the real level of protection their bookings come with. We believe this is a completely unacceptable way to treat UK consumers.

“If you book a holiday on, you won’t receive Atol protection. In fact, our legal view is that you may not have any protection at all and even if you do, the protection the site claims to offer is extremely limited. So consumers looking to book with the company have to ask themselves whether they are happy to take that risk or not. We are now using our legal powers to protect consumers and make sure they are not misled.”

Alongside beginning a legal investigation, the CAA is publishing the following advice for anyone who has booked on, or is considering doing so in future:

• Bookings made on since November 1 are not protected by Atol.
• The CAA has taken steps to understand the Spanish financial protection system, where Lowcostholidays say their bookings are protected. The CAA’s legal view is that anyone booking on may not have financial protection and even if they do, that protection will be extremely limited.
• Even if passengers are protected (which would most likely be for a Spanish court to finally determine) the protection under the Spanish system is not the same as Atol. For example, unlike the Atol scheme, passengers protected under the Spanish system are not repatriated home in the event of travel company failure while abroad.