The CAA’s proposed Atol reform will have a “significant and disproportionate impact” on tour organisers, leading industry accountant Chris Photi has warned.
Photi, head of travel and leisure at White Hart Associates, suggested a CAA claim to “recognise the importance of consistency” across the sector “beggars belief” and described a proposal to separate customer money in ‘client accounts’ as “a regressive step”.
The CAA issued an update and request for further information on Atol reform in January. Writing in this week’s Travel Weekly, Photi insists Atol reform “needs to go hand in hand with addressing airline insolvency and ensuring protection applies to pipeline funds held by travel agents”, suggesting: “There is little point placing the sole regulatory focus on travel organisers if airlines or travel agents are not forced to segregate consumer funds.”
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He notes: “Flights can be 45% of the cost of a holiday, so if segregation is going to work, airlines must be subject to the same requirement.”
Photi also hit out at a proposal to allow ‘client accounts’ overseen by a company director and a certified Atol-reporting accountant (ARA) as an alternative to trust arrangements, describing it as “regressive” and pointing out ARA reporting required for existing trust accounts still awaits CAA agreement with the accountants’ institute, the ICAEW.
He noted “not all small businesses” could afford to comply with a CAA suggestion that smaller Atol holders join an accredited body or franchise to comply with the reforms.
Alan Bowen, advisor to the Association of Atol Companies, also criticised aspects of the reform proposals but welcomed the option of client accounts and provisions to prepay suppliers. He noted the CAA focus on “the separation of funds” but said: “At least it doesn’t have to be a trust account, and the CAA accepts money needs to go out of accounts. Allowing prepayments is important.”
However, he added: “We thought bonding would be an option, but it will only be for those whose finances aren’t healthy, so that’s not helpful.”
Bowen suggested the Atol reform update “has the hands of the new aviation minister all over it”, noting aviation minister Baroness Vere told an Abta summit in December: “We can’t have people operating on wafer-thin margins relying on payments from customers yet to take their holidays.”
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