Abta has raised a series of concerns about the Civil Aviation Authority’s (CAA’s) latest Atol-reform proposals ahead of the association’s Travel Finance Conference next week at which CAA head of Atol Michael Budge will make the case for reform.
Simon Bunce, Abta director of legal affairs, noted the Department for Business is reviewing the Package Travel Regulations (PTRs) with seemingly no coordination between it and the CAA’s Atol reform, and said: “It’s a surprise there is no reference to the PTRs by the CAA.”
Bunce noted: “We seem to be heading towards a more flexible position on the PTRs and any changes will be benign.
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“But on the Atol side we’re tending towards increased regulatory oversight, with significant changes to how financial protection is funded.”
He argued: “We’re not sure what the CAA is trying to achieve. Michael Budge wrote in Travel Weekly that he wants to increase the financial resilience of the scheme and of the wider travel industry. But the industry has proved highly resilient in the last two years.”
Bunce noted a shift in the CAA’s position on segregating customer money, with a separate client account touted as an alternative to trust or escrow arrangements in the latest proposals.
He explained: “Abta always had concerns about trust accounts, which were addressed by the 2018 PTRs, but what we’ve ended up with is a robust trust system that comes at a cost. Now the CAA is saying segregation could be less robust and come at a lower cost.
“We have members who separate customer money into client accounts now, and there are no additional costs. The costs come when you move to fully segregated accounts.”
He added: “Nothing seems built into [the proposals] to recognise that merchant acquirers pick up a large proportion of refunds when there is a failure, [and] there is still the issue of airline insolvency. The Airline Insolvency Review just seemed to be shelved [by the government]. But Flybe went bust in the middle of the Atol reform process. You can’t just ignore that.”
Abta will host a series of financial protection workshops and survey members online as it formulates a response to the CAA’s Atol reform proposals.
Rachel Jordan, Abta director of membership and financial protection, plans four financial protection focus groups to bring together “large and small businesses, bond and insurance providers, merchant acquirers, accountants and financial advisors to assess the impact not just on travel businesses but on financial service providers”.
She said: “We’ll send a survey out to all members and hold an online briefing and Q&A to inform our response by March 24.”
Bunce and Jordan are due to speak on Atol reform and the PTRs at Abta’s Travel Finance Conference in London on March 1-2.
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