There are still gaps that need to be filled as the next stage of the CAA’s consultation arrives, says Travel Industry Experts’ Matt Purser
2023 is now upon us and the eagerly awaited update from the CAA on the Atol consultation has arrived.
As I often say, no one starts a travel business because they want to learn about travel regulations but if you sell travel, you are caught in the middle of them and if you like it or not, it affects your business.
Ever since I joined the industry it seems the regulations have always been under review and we are once again in that review period. I think we all need to accept regulations will never be perfect as they always need to react to changes in the industry, whether that is global pandemics, large failures or a new way to sell travel.
There will also be changes around how consumer monies can be protected with new solutions entering the market and outside factors affecting businesses. If we accept regulations will never be perfect, always need to be amended, and we constantly need to review and adapt, we also need to accept we need to change quicker.
Here we are, having just started a new year and we have just received the latest update to the Atol consultation. In April 2023, it will be two years since the Atol consultation was issued and in the latest update it says the new regulations could be in place by Q1 of 2024. Is this date realistic if legislation is required because we are likely to be headed to a general election in 2024? New regulations in 2024 would be three years after initial consultation.
As I said above, we need to accept that regulators and regulations will always be reactive and play catch-up but we are in danger of the new regulations already being out of date when they come into effect.
So what would work better? Changing parts of the regulations such as a definition of a package clearly needs wider discussion but why, in this interim period, can we not give tour operators options of how to provide financial protection provided it doesn’t have a detrimental effect on consumer protection.
We are two years into a period where Atol holders have financial criteria to meet and if they do not meet the criteria they can provide security in the form of a trust account, escrow account or bond.
The latest update is relatively quiet on Financial Failure Insurance (FFI) but why not give Atol holders the choice of insurance too? I get the fact CAA cannot anticipate and guess the way the consultation will go and what the scheme will finally look like but in this interim period, which is likely to hit at least three years from initial consultation, Atol holders are in danger of incurring additional costs and stress while we wait for the conclusion.
The Package Travel Regulations give organisers a choice of how they comply (trust accounts, bonds or insurance) so with Atol, should they not get the same flexibility? Everyone accepts one size does not fit all, so let’s be more flexible in our approach and the majority agree that consumers should be protected but there is more than one way to skin a cat.
The concerns raised in this update about the ability of the insurance market to meet market needs are correct both in market size and quality of cover, based on past experiences. This update correctly notes the willingness of insurance providers to re-enter travel in a meaningful way, and this is certainly the case for our clients where we are constantly trying to design fit-for-purpose and future-proof insurance products.
Looking at it through that lens, surely it makes sense that the eventual consultation results in FFI standards would mean the insurance can be relied upon and be seen as a viable option. It is then for the insurance market to come to the party and provide sufficient products that can be endorsed.
The update again raises issues regarding pipeline monies, monies due to suppliers and when payments are taken from consumers. These can be resolved by collecting data and should be at the forefront of any changes. How can we expect regulators to make decisions on financial criteria and security levels, if they don’t have access to information such as
- lead times
- pipeline monies
- deposit amounts
- interim payments
- lead times
Solutions to solve these issues are already available in the market and providers are keen to work with a number of travel businesses. We need to bring them into the discussion now; otherwise I fear we’ll be looking to update the regulations again. We need to deal with these problems now or we’ll end up with new regulations that still don’t solve all the issues.
Please make sure you respond to the consultation; the more firms that respond, the more suitable regulations we will get. The CAA admits they don’t have all the answers, so we need to work together to build regulations that work for all.