The Association of Atol Companies has warned many members have “genuine concerns” about CAA proposals for Atol reform despite some larger AAC members favouring a move to trust arrangements.
The AAC said the overwhelming majority of members who responded to a survey felt Atol reform could not be separated from action on airline insolvency and 70% said Atol holders “should reject major changes” to Atol if the government failed to act on this.
The association noted: “Airlines were one of the major causes of delays to refunds in 2020 for which Atol holders frequently took the blame.”
AAC members accounted for more than £5 billion in sales in 2019.
The CAA issued published a consultation at the end of April on proposals which would make trust accounts the main source of financial protection for overseas holiday bookings.
The consultation ends on August 15, with detailed proposals expected to follow early next year.
AAC legal advisor Alan Bowen said: “We surveyed members and had a response rate in excess of 30%, clearly showing genuine concerns.
“A number of the AAC’s largest members already operate their business through trust accounts and believe this is the way forward.
“[But] others expressed genuine concern that forcing trust accounts [on Atol holders] would have an adverse effect on their business, particularly in the current difficult trading environment.”
Nine out of 10 AAC members (89%) who responded to survey agreed “action in respect of airline insolvency should be introduced at the same time” as any Atol reform.
Lindsay Ingram, chair of the AAC, said: “There is an urgent need to review protection for those Atol holders linked to their own airlines as these have historically been the major cause of losses from the Air Travel Trust.
“Most other Atol holders issue air tickets at the time of booking or shortly thereafter, ensuring there should be no cost of repatriation in the event of failure of the Atol holder.”
By contrast, the AAC noted the collapse in 2019 of Thomas Cook, which had its own airline, “led to the almost complete exhaustion” of the Air Travel Trust.
It reported 60% of members surveyed would prefer to revert to bonding rather than move to trust arrangements, although they “recognise this may be difficult without a major escalation in availability”.
The AAC said: “Others would be interested in moving towards insurance against failure, a position the AAC proposed almost 20 years ago.”
Ingram said: “It is clear the CAA should propose a range of options to meet the differing needs of Atol holders.
“The CAA must take account of the different and strongly held views of Atol holders before taking further steps.”