The move to scrap Small Business Atols suggests now is the time to make all Atol holders operate trust accounts, says Travel Counsellors’ David Speakman
The consultation prior to the likely cancellation of the small business Atol will, claims the CAA, bring fairness to an Atol that has been too cheap and exposes the Air Travel Trust (ATT) to unnecessary claims.
So approximately one thousand agents will no longer be able to obtain this licence but will have to seek the umbrella of an accredited body, or be subject to the full financial rigour of a mainstream Atol application.
You can see the CAA logic – these small businesses are more trouble than they’re worth to the regulator; they present more exposure and now there are alternatives.
Travel Counsellors, like other accredited bodies, will be only too willing to be the “port in a storm” for these soon-to-be-disenfranchised agents.
But if the CAA wants a really fair system that balances risk and reward and avoids unnecessary exposure to the ATT, then surely now is the time to bring all Atol holders to operate trusts.
All accredited bodies, with the current shameful exception allowed by the CAA of Thomas Cook/Co-op Travel’s Freedom Travel Group, have to place customer money in a trust.
Apart from the obvious decrease in risk, it creates a level playing field for the industry which limits mainstream operators using vast amounts of customer money in place of genuine working capital.
So, this move should only be applauded if it is a precursor to a fairer system.
However, the CAA’s failure to impose its own rules on one of the major players and placing the onus of financial protection on the “chefs of the industry and not the cooks” (no pun intended), smacks of a bias that reflects the lack of appetite to address the fundamental issue of bonding all air travel, be it low cost or scheduled.
Of course this solution could not be implemented overnight, but the issue must be tackled as more airlines seek to fill some of their capacity by becoming tour operators and increasing the risk to the ATT.
Last year Chris Photi of Whitehart Associates wrote about the risk the mainstream operators pose to the ATT and how he believed paying just £2.50 did not reflect the risk to the fund.
In fact, he said, its exposure to a major operator going bust would ultimately overwhelm the ATT.
It is indeed ironic that the Chairman of Abta, who has previously demanded a level playing field for the industry, should now have his SBA Aito members hoisted by his unfortunate petard.