The CAA is insisting tour operators with Atol business worth in excess of £20 million a year move to trust arrangements as Atol-holders renew their licences.
That is according to Elman Wall head of audit Ian Palmer, who forecast the trust account requirement would be “standard” for large Atol holders by the time of the September licence renewal.
The CAA reported on the March Atol renewals on Tuesday (April 6), noting 554 of the 742 licence applications were renewed
However, Palmer said: “The big news is that for larger Atol holders, in excess of £20 million a year, the CAA has been insisting on an escrow [trust] account. This is quite a big change.”
He told an Elman Wall industry webinar: “We’re seeing this kick in for larger Atol holders and we expect it will be standard by the September Atol renewal.”
Palmer suggested: “It is inevitable the CAA will start to apply it to smaller Atol holders, but we don’t know when.”
He described the renewal process as “even less predictable than normal”.
Palmer told the webinar the renewals fell into three groups, saying: “One third renewed without problems although it seemed to take a long time. One third we knew would have to do something to get through, raise a bond or a cash injection. And one third had to get into quite a lengthy negotiation.”
Speaking on the same webinar, Abta head of financial services John de Vial said there were “no real great surprises” in the Atol renewals, suggesting: “In some ways the March renewals were easier [than last September].
“The March bond renewals are smaller and sentiment was better in March than in September because of the feeling that we’re coming through this. But, of course, the March renewal participants have been through six months more of crisis.”
De Vial made clear Abta is “not aligned” with the CAA on trust accounts, arguing: “The requirements in the Package Travel Regulations [PTRs] are very specific and different to the CAA’s position under the Atol regulations.
“There are some very good trust arrangements out there, but there are very few that comply with the PTRs and that is a fundamental problem for us as a Department for Business [BEIS] approved authority.”
However, De Vial said Abta “may very well consult” its members on “how this might be taken forward”.
He noted the remarkable resilience of the sector through the crisis, saying: “We’ve had 24 failures from an Abta membership of 1,000. That is more than enough, but given a year of shutdown that is extraordinary.
“The CAA has had 30 failures, most of which overlap with us. That is quite remarkable, but it reinforces the view of the government that the sector is getting through this.”
He said: “I think the government understands things would change if a substantial part of the summer is lost, but they are not blinking yet on sector-specific support.”