The Civil Aviation Authority (CAA) has spelled out its concern about the financial protection offered customers of Lowcostholidays despite saying “many issues have been addressed” following the company’s move to Spain.
David Moesli, deputy director of the CAA consumer protection group, suggested the Balearic scheme under which Lowcostholidays is licensed “provides little protection for UK customers”.
Moesli restated the CAA view while confirming the regulator is in talks with the company after CAA head of Atol Andy Cohen revealed: “Many of the issues have been addressed and we’re in dialogue. We’re very happy with that.”
Cohen was speaking at an event organised by travel law firm Travlaw in London last week.
Lowcostholidays UK was among the top-20 Atol holders last year, licensed by the CAA to carry 260,000 passengers. The company relocated to Spain on November 1 where it is now established as Lowcostholidays Spain.
A revision of the Atol Regulations in 2012 allows companies to sell holidays in the UK without an Atol so long as they are established in another EU state and comply with local regulations.
Moesli acknowledged: “The company has willingly engaged in discussion regarding amendments the CAA would like to see [to its website]”.
However, he said: “The CAA’s concerns remain focused on the position of consumers [who] must be able to make an informed choice between the financial protection provided by the Atol scheme and that provided by arrangements under a Balearic Islands licence.
“The CAA published details of the Balearic Islands scheme in December. The details have not been challenged by the Balearic authorities.
“In the CAA’s view, the Balearic scheme provides little protection for UK customers.”
Moesli said: “In respect of repatriation, the consumer is required to make their own arrangements and claim back expenditure.
“With regard to refunds, the CAA understands the Balearic scheme required Lowcostholidays put up a euro63,000 bond and there is no further funding.
“In the event of a failure, the CAA believes customers would get a very limited pay-out.”
He insisted: “The CAA is not saying consumers should not book.”
But Moesli said: “Unless there is evidence the position has improved, [the CAA] will continue to provide information about the shortfall in protection under the Balearic scheme and others where … non-UK based companies aim holiday sales at the UK market.”
Lowcostholidays expressed disappointment at the CAA’s statement. Lowcost Travel Group chief executive Paul Evans said: “We have no further comment to make.”
The CAA statement to Travel Weekly in full:
CAA statement on Lowcostholidays, 27/01/2014
The CAA has spoken to Lowcostholidays about what it considers to be breaches of the Consumer Protection Regulations on its Lowcostholidays Spain website, which is aimed at consumers in the UK. The company has willingly engaged in discussion regarding amendments the CAA would like to see. The CAA will confirm details once it considers the website to be compliant.
The CAA’s concerns about the Lowcostholidays move to Spain remain focused upon the position of consumers. Even if the company amends its site to meet the Consumer Protection Regulations, the CAA still believes that consumers who consider booking with Lowcostholidays must be able to make an informed choice between the financial protection provided by the ATOL scheme and that provided by the arrangements under a Balearic Islands licence.
The CAA published details of the Balearic Islands scheme and a comparison with ATOL on its website in December. The details published have not been challenged by the Balearic authorities and so the CAA concludes that they are broadly accurate.
The CAA has already stated that in its view the Balearic scheme provides little protection for UK customers.
In respect of repatriation, the consumer is required to make their own arrangements and claim back their expenditure after they have returned from the holiday. Under ATOL, repatriation is a key part of the scheme, because it not only looks after customers at a critical moment and allows them to complete their holiday, but will seek to minimise expenditure by co-ordinating the parties involved.
With regard to refunds, the CAA understands that the Balearic scheme has required Lowcostholidays ES to put up only a Euro 63K bond and that there is no further funding for refunds. The CAA believes this small fund will mean that in the event of a failure customers would get only a very limited payout, or nothing as under their last ATOL, Lowcostholidays was looking to carry more than 250,000 UK passengers per annum.
The CAA has received no new information on the Lowcostholidays ES protection arrangements, so unless there is evidence that the position has been improved, it will continue to provide information to the UK public about the shortfall in protection under the Balearic scheme and others where it becomes aware that non-UK based companies are aiming their holiday sales at the UK market. The CAA is not saying that consumers should not book, but before they do so they should be aware of the differences between the protection systems so they can make an informed choice.