Critics of model are misguided, argues Protected Trust Services financial director Tom Clay
Trust accounts are being embraced by the UK travel industry for many reasons. Trust accounts offer travel companies, consumers, stake holders and suppliers far more comfort than any other protection model available.
The key is that the trust account is well managed and reconciled daily – just as Protected Trust Services offers. One failure for a company using a trust account model does not mean the trust model does not work.
This is particularly so when you look at the Air Travel Trust that runs Atol. Alan Bowen is wrong to say that the failure of Teletext Holidays parent Truly Travel shows a real flaw with trust accounts. He is wrong for 448 million reasons and there are millions more reasons in 2021.
TTA Travel has said that it will fulfil outstanding Atol-protected bookings for Teletext Holidays. If the bookings are fulfilled by TTA Travel there will be no call on the Air Travel Trust (ATT) under the Atol guarantee.
This contrasts with the Air Travel Trust annual report for the year to 31 March, 2021 which details claims on the Air Travel Trust of £448,459,994 – the vast majority of which related to Thomas Cook. This does not include the large sums of money that Thomas Cook collected and did not pass on for holidays it sold on behalf of third-party Atol holders.
A large number of travel businesses made substantial losses because of Thomas Cook. Thomas Cook and Monarch are clear examples of the enormous flaws of the bond protection model.
It seems entirely logical to me that the CAA should believe that holding money in trust is a better solution than other forms of protection.
Trusts are not flawless. There is an issue when suppliers, particularly some airlines, do not meet their responsibilities to refund. But the consumer and the ATT are in a far better position where the only use of a consumer’s money is for the payment of suppliers for that consumer’s holiday.
Refunds have been far more difficult for travel firms who do not hold consumer money in trust, as is reflected in the many unfortunate insolvencies reported in Travel Weekly this year. None have involved members of Protected Trust Services and we believe this is a testament to the protection a well-managed trust account provides.
No system of consumer protection is flawless. But a properly run trust account, reconciled daily down to individual booking level, is a far better option than current alternatives.
We are confident that the CAA, and many stakeholders, will continue to embrace trusts due to the increased protection a well-run trust model offers to both businesses and consumers.