Airline association Iata is opposed to the mandatory segregation of customer money by Atol holders and has made clear its opposition in its response to CAA proposals for Atol reform.
Iata UK and Ireland country manager Simon McNamara spelled out the association’s view at an Abta Aviation Forum in London on Tuesday, saying: “We’re against the principle of segregation, particularly when air tickets have been issued and particularly when these have been issued through the Iata BSP [billing and settlement plan].
“It is a payment to the airline, and airlines are not banks. It’s only right the payment goes to the airline.”
The CAA has acknowledged segregation of client money is its “preferred option” for reform of the Atol scheme but insists “no decisions have been taken” and it’s considering “a range of different approaches to segregation” set out in a ‘Request for further information’ issued in January. The CAA is considering the responses ahead of a follow-up consultation on detailed proposals, expected in the autumn.
McNamara told the Abta forum: “If the CAA imposed segregation it would have a huge impact. It would change the whole financial set-up of the industry.” He added: “Our BSP system protects money before it’s passed from agents to airlines.”
Rachel Jordan, Abta director of financial protection and membership, noted the CAA has proposed “significant change” to the Atol regime and said: “There does seem a preference for segregation. Some members already do that and are happy with it. But a lot don’t. If segregation was mandatory it could be difficult.” She insisted: “Flexibility remains key.”
Jordan also called into question the CAA’s proposed start date of April 2024 for reform, arguing: “The timescale is challenging. It’s difficult to see how it can happen given the CAA has to work with the Department for Transport and it’s likely we won’t see the follow-up consultation before the autumn.”
Abta director of industry affairs Luke Petherbridge argued: “There have been hints of a two-step process – there could be immediate changes introduced from April 2024 and longer-term changes.”
He noted a proposed move to a variable Atol Protection Contribution (APC) on bookings would need primary legislation in Parliament which would be unlikely before a general election, due by the end of next year.
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