The Civil Aviation Authority (CAA) proposes to abolish the Small Business Atol (SBA) and impose new financial criteria on travel companies with annual turnover below £5 million.
The CAA published a three-month consultation on the changes this morning, saying they are needed because of the greater risk of failure among smaller travel companies.
In a statement, the regulator said the changes would “extend the risk-based regulatory approach now established with larger licence holders, help reduce the likelihood of consumers being affected by insolvency and provide further protection against calls on the Air Travel Trust (ATT)”.
The consultation gives details of three major changes affecting smaller Atol holders:
The withdrawal of the Small Business ATOL (SBA) scheme.
The adoption of “a more risk-based method of financial assessment for Atol holders with licensable revenue of less than £5million”.
And the introduction of “revised assurance reporting arrangements, developed in conjunction with the Institute of Chartered Accountants in England and Wales (ICAEW)”.
At the same time, the CAA promises new online facilities giving Atol holders access to self-service and self-assessment services.
Current SBA holders will face higher costs or need to obtain Atol cover through an Atol Accredited body or franchise.
The regulator said the changes would come in “over a number of years”, but it’s expected the changes would take three years.
The CAA proposes to issue no new Small Business Atols after next April.
The authority acknowledged: “The proposed withdrawal of the SBA licensing scheme is a significant change for smaller businesses.”
But it said: “There are now established alternative ways of meeting the regulatory requirements and any implementation will be phased in over a number of years.”
The CAA explained: “The revised assurance reporting arrangements for all Atol holders are intended to ensure the CAA obtains accurate reporting of all Atol activity.”
CAA head of Atol Andy Cohen said: “We are very aware that a financial protection scheme needs to be able to demonstrate that there is fair treatment for all licence holders and, where it is clear there is a higher risk of failure among some members, that needs to be reflected in the regulatory requirements.
“We believe this approach will benefit the industry and the consumers that it serves equally.
“This is also consistent with better regulation, as the costs of regulation should be proportionate and increased requirements should only be targeted at business models which represent greater risk.”
The consultation will run until October 6.
In response, Abta said: “Abta will be contacting its membership in order to make a full response to the CAA’s ‘Rebalancing Atol’ consultation which closes this October and which will consider a number of changes to the financial protection scheme.
“We can clarify that proposals to withdraw the small business Atol, published as part of the consultation, will not affect Abta-Atol holders.”