The CAA intends to introduce “risk pricing” to Atol licensing which could mean variable levels of Atol Protection Contribution (APC) for Atol‑holders.
An industry consultation will outline the CAA’s “direction of travel” for addressing “the level of risk” attached to operating without trust arrangements. Abta warned the proposed changes would “lead to additional costs” for many businesses.
Atol-holders are currently charged a flat rate of £2.50 APC per passenger.
CAA group director of consumers and markets Paul Smith confirmed the move in a Travel Weekly Future of Travel webcast, saying: “There is a lot of discussion about the merits of trust funds, and there are plenty of merits.
“There may also be good reasons for other business models. But if those business models are imposing a certain level of risk, is that adequately accounted for? Is there sufficient recognition of the risks that different business models impose?”
He explained: “The consultation is going to set out how we want to look at these issues and how we think about better pricing of the risk imposed.”
Smith insisted: “This is not to force people into a particular business model.”
But he said variable rates of APC would be “one way of thinking about how you price risk”, adding: “You could certainly think about that as an option to reflect the level of risk a business or model imposes. It’s not necessarily the only way. But variable levels of APC are potentially one way of pricing risk differently.
“I’m conscious, though, that there is a vast range of Atol‑holders and we need a system that can be understood and can be operationalised by us. So how far you take risk pricing needs to be thought about.”
Smith said: “We’re not going to set out a solution at this point. It’s an opportunity to get input about the direction of travel. If we make changes, what is the way to transition? How do we take account of different‑sized Atol-holders?
“The consultation will give a sense of direction to try to address how we strengthen [protection] for customers, get better risk pricing [and] work with different business models. [We’re] conscious there are a range of ways to manage or mitigate risk – bonding, insurance, trust funds.”
Abta director of membership and financial services John de Vial warned: “These changes are likely to lead to additional costs for some people. That is the reality. It might be the right answer, but whether people can deal with it in the short term is a different question. Taking this at a sensible pace and working through it carefully is important.”
Smith said the consultation would be out “in the next couple of weeks”, with the aim of producing “concrete proposals towards the end of this year”.
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