Atol reform: Segregation of customer payments ‘not off the table’

Compulsory segregation of customer money “remains on the table” for Atol-holders as the CAA and Department for Transport finalise Atol reform proposals, aviation minister Baroness Vere affirmed today.

Addressing Abta’s Travel Matters conference in London, the aviation and maritime minister said: “We are still working on Atol reform. We have to get this right. We hope to make an announcement soon.”

The CAA published an initial consultation on reform of the Atol scheme more than two years ago and issued a ‘Further Call for Evidence’ in January, with a second consultation on detailed proposals now expected by the autumn.

The call for evidence sought industry responses on various forms of segregation combined with insurance or bonding, amid widespread concerns in the industry that a wholesale requirement to segregate customer payments could make some businesses no longer viable.

Asked whether mandatory segregation of customer money would form part of the forthcoming consultation, Baroness Vere said: “It’s not off the table.”

She insisted: “Nothing is off the table on Atol reform.” But she added: “I recognise that one size fits all is not practical in this industry.”

The minister argued: “There are many industries where using customer money is a ‘No, No’. If a business is doing that there is an enormous responsibility to do it right.

“I understand the difficulty, but it is still use of customer money.”

Labour’s shadow aviation, maritime and security minister Mike Kane raised the issue of airline insolvency, which most Atol holders would like to see addressed alongside Atol reform.

He told the conference: “We saw Thomas Cook, Monarch and Flybe all go out of business before the pandemic. We have to be better at handling this.

“I hope to ensure legislative protection of passengers when something goes wrong. There has to be a better financial model. Other countries have better [airline insolvency] models.”

Asked whether Labour would introduce an Airline Insolvency Bill, he noted: “The government was going to tackle this. I’m not promising it, but I would look at it.”

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