The UK’s major package holiday companies say it is “inevitable” that the trade will have to segregate customers’ cash in a separate account when the Atol system is shaken up.
The Civil Aviation Authority has consulted the trade about reforms and wants segregated customer payments, most likely in trust accounts, to become a condition of Atol licensing not just for Atol holders but for agents selling their holidays.
Steve Heapy, chief executive of Jet2holidays, told a recent Travel Weekly Future of Travel event that many companies had been using customers’ and suppliers’ cash as “unsecured loans” which they cannot pay back “when they hit trouble”.
He backed the ringfencing of customers’ cash in order to restore the reputation of the industry.
“I think the reputation of the industry has taken a lot of hits over the years with XL, Thomas Cook, Lowcost and Monarch,” he told the conference.
“We have got to do something to restore the reputation to give confidence.
“It certainly did not help matters that some companies handled refunds very badly [during the pandemic].
“That’s one of the drivers to the CAA wanting to segregate customer money.
“They have taken the naughty child approach and said ‘if you don’t refund money and you’ve not been refunding money, we’re going to do it for you, so we are going to segregate your cash, and when customer money needs refunding it will come out of the segregated account’.
“The industry is headed for the segregation of cash and it has only got itself to blame.”
Also speaking at the conference was Andrew Flintham, managing director for the UK and northern Europe at Tui, who commented: “The direction is inevitable and will provide greater security for customer cash.”
However, he argued there cannot be a “one-size-fits all model” because travel businesses vary in size.
“If you end up with a very, very simplistic model it works for some parts of the industry and not for others,” he said.
“It needs to be reform that provides the same degree of protection but is not a specific mandated model.”
EasyJet holidays’ chief executive Garry Wilson agreed that “one-size-fits-all” is not necessarily the right thing.
He said there are alternatives that can offer protection for customer funds.
“Whatever the ruling is, whether trust or not, we will support that,” he said.
Heapy also said the government must bring its review of airline insolvency together with the Atol review, to create one single revamp of airline and tour operator customer protection.
He pointed to the collapses of Monarch and Thomas Cook, when flight-only customers were repatriated despite not being under the Atol scheme, and effectively getting free protection.
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