The Air Travel Trust which underwrites the Atol consumer financial-protection scheme is in credit to the tune of £108 million despite paying out £444 million following the failure of Thomas Cook in 2019.
The healthy balance was revealed as the CAA belatedly issued the Air Travel Trust (ATT) annual report and accounts for the financial year to the end of March 2021 today.
The report notes 34 Atol holders failed in the first year of the pandemic to March 31, 2021, more than four times the number in the previous year and the highest number since the financial crisis of 2008-09.
More: Atol reform plans ‘lack consistency’, warns leading industry figure
Concern raised over lack of Air Travel Trust information in Atol reform proposals
It estimates the claims on the fund as a result of these failures will total almost £11.4 million, while noting that eight of the failures will cost the trust nothing since four provided bonds of a sufficient size, three were managed by Atol-holding franchises and one had no claims.
The fund’s trustees also note in their report that none of the failures incurred repatriation costs and that total advance bookings only amounted to 68,000 – a relatively low figure for the number of failures.
The most costly failure was that of STA Travel in August 2020, which ceased trading with almost 32,000 customers owed refunds. However, STA provided a £7.8 million bond which left the estimated call on the trust at just over £2.8 million.
The Air Travel Trust received more than £20 million in Atol Protection Contribution (APC) payments during 2020-21 when travel was in effect shut down for lengthy periods.
However, the trustees report APC payments since the end of the 2020-21 financial year reached two-thirds of the pre-Covid 19 level, taking the trust’s reserves to £108 million on the date the accounts were signed off at the end of last week (February 17).
In addition, the trust retains a commercial credit facility of £75 million and the trustees note their “expectation” that the government “will provide additional financial support to the ATT as necessary”.
The report confirms the fund is no longer backed by an insurance policy in the event of a failure costing in excess of £50 million. This policy expired on March 31, 2020, and has not been renewed since the insurance paid out on the failure of Thomas Cook.
The accounts were well over a year overdue, having been published in pre-pandemic years within three to four months of the financial year’s end.
The delay is understood to be due in part to uncertainty around the outlook for travel bookings following the lifting of pandemic-era restrictions.
The report notes travel bookings “throughout 2022” remained below pre-pandemic levels and suggests: “The travel sector remains in a critical condition.”
More: Atol reform plans ‘lack consistency’, warns leading industry figure
Concern raised over lack of Air Travel Trust information in Atol reform proposals