A review of the Package Travel Regulations and delay to Atol reform provide an opportunity to combine the two, suggests Ian Taylor. But don’t expect it
The delay in Atol reform until next year and the promise of a consultation on package travel reform in 2024 together raise the possibility of a coordinated overhaul of financial protection long sought by the sector.
The Civil Aviation Authority (CAA) confirmed a delay to its long-expected Atol Reform consultation when head of Atol Michael Budge spoke at the Abta Travel Regulations Conference in London on November 15.
A senior Department for Business and Trade (DBT) official outlined proposals for reform of the Package Travel Regulations (PTRs) at the same conference, pledging to follow the department’s current Call for Evidence on reform with a consultation “in the new year”.
The former head of the Federation of Tour Operators Andy Cooper, now head of regulation and compliance at Kognitiv, told the conference: “I’ve been looking at this issue for 30 years and there has never been a better opportunity to look at it holistically.”
Cooper suggested the industry had seen the Atol scheme “just bolted on to the 1992 Package Travel Regulations” and it had remained bolted on to the 2018 regulations.
However, in launching the Atol Reform process in April 2021 the CAA made clear it was solely “looking at changes which the CAA is able to make through its own regulatory powers”, and Budge ruled out a wider, holistic review of the regulations without action by the government when he spoke at the Abta conference.
He said: “We recognise the asks for alignment to bring these things together. [But] we’re not able to do it. It requires a minister to do it.
“We recognise the challenge to businesses where there are different schemes. But that harmonisation can only from ministers.”
Budge also noted: “The CAA has been a strong advocate of doing something on airline insolvency, but it requires the government to do something.”
Rather than do something, the government’s Airline Insolvency Review, commissioned after the failure of Monarch in 2017, has lain dormant since its final report in May 2019. That is despite the then transport secretary, Grant Shapps, pledging to revive the review following the failure of Thomas Cook in September 2019.
Atol reform delay
Explaining the Atol reform delay, Budge said: “It’s an incredibly challenging area of discussion and reform. The Department for Transport want to get this right. We want to get it right, and it’s not as straightforward as some might think, when we need to get all stakeholders involved.”
Asked whether it might be possible to simplify financial protection requirements for businesses by combining CAA and Abta bonding arrangements, Budge pretty much ruled it out.
He explained: “Some financial providers provide bonds for both the CAA and Abta. [But] if they were brought together in one bond, it could become very difficult in a failure. We wouldn’t want two parties arguing over the financial security.”
So, the holistic review the sector would prefer to see appears to remain out of scope.
Ironically, Department for Business and Trade assistant director for partnerships and consumer policy Craig Belshaw revealed the package travel review could look at an aspect of the overlapping consumer financial protection provided by the PTRs and section 75 of the Consumer Credit Act.
This protects credit card payments over £100 and under £30,000.
The Call for Evidence on reform of the PTRs includes a proposal to remove lower-priced holidays from protection.
Belshaw defended its inclusion by explaining: “It exists in consumer law elsewhere. The Consumer Protection Act has a threshold on credit card refunds of £100. If you wanted to provide restricted liability, it is reasonable to see whether that has support.”
In reality, this offer to rationalise the overlapping regulations would lead to unacceptable inequalities and has been roundly condemned within the industry.
A change of aviation minister in the recent government reshuffle which saw Baroness Vere replaced by Anthony Browne MP, former chief executive of the British Banking Association and government Anti-Fraud Champion, may only delay the Atol reform a little further while Browne is brought up to speed – and presumably the new minister will have a head start in understanding the finer points of financial protection.
However, further delay seems likely, chiefly due to a lack of government concern to drive any policy through while ministers are preoccupied with the coming general election and announcements targeted at improving the government’s standing in the polls.
A lack of ministerial time could also be a factor. Browne will not have to deal with maritime issues alongside aviation as his predecessor Baroness Vere did, but his responsibilities also include transport decarbonisation, air quality, technology, space, skills, science and research.