Atol reform proposals forecast to draw ‘Marmite’ response

The CAA consultation on Atol reform launched last week is likely to produce “a Marmite response” from the sector.

That is the view of a senior industry source, who warned the CAA’s proposals that Atol holders segregate customer payments until holidays have been taken “would be challenging for many businesses”.

Few travel businesses or associations have so far responded officially to the CAA proposals, with most attention focused on the government’s imminent announcement of the first overseas destinations to be open to UK travellers for this summer season.

Analysis: CAA proposes fundamental Atol reform

However, the consultation proposes fundamental changes to Atol licensing requirements which many travel companies may struggle to meet.

Crucially, it proposes moving Atol holders to trust or similar arrangements which would tie up most customer receipts for weeks or months.

Businesses would be required to segregate customer payments partially or in total.

The consultation also proposes varying the rates of Atol Protection Contribution (APC) on bookings, moving from the current £2.50 flat rate to a variable amount reflecting the extent to which customer money is segregated and the ‘risk’ a company poses.

The rate could also reflect the relative value of bookings.

The industry source noted: “The CAA is looking to drive businesses away from funding any element of their operations with customer money. There will be polarised views [on that].”

However, a second source stressed: “It is a consultation not a done deal. The CAA is looking for feedback. It does recognise the challenges.”

The consultation will extend to July 30, with a follow-up consultation detailing specific proposals expected early next year.

A transition to a new system is expected to take at least 12 months to two years depending on the complexity of the changes.

The timetable could also depend on travel’s recovery from lockdown and whether there is any resurgence of Covid-19.

One industry source suggested: “What might be a reasonable time frame in non-Covid times might make no sense during Covid.”

Analysis: CAA proposes fundamental Atol reform

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