Abta’s March bond renewals could prove challenging amid the current financial pressures on members, but the numbers pursuing alternative trust arrangements so far are limited.
Mark Tanzer, Abta chief executive, said: “A small number of members have expressed interest. None has yet materialised, but the door is open if the right criteria are met.”
Members can use trust arrangements to meet financial protection requirements for the first time from April. Abta has made clear it won’t stand as guarantor behind these.
Tanzer explained: “We’ll make sure the terms and conditions say this is how they comply with the Package Travel Regulations and that is upfront and clear in the booking conditions. We already have that with companies providing financial protection through financial failure insurance. It should be possible to make it unambiguous for customers.”
There are also no agreements in place with trust providers yet. But Tanzer said: “Those discussions are happening.”
Most members due to renew in March will be looking to bonds or insurance.
Speaking on a Travel Weekly webcast, Tanzer conceded: “The September renewal was tough.” Yet he noted: “There were predictions there would be a meltdown or ‘Armageddon’ and it hasn’t happened. Members came through.
“This next round will also be challenging because trading hasn’t come back yet and balance sheets aren’t great. But the financial markets see we may have turned the corner and that should give more confidence.
“Members will be able to find the bonds required. It won’t be easy, but I don’t see why we won’t have the success we had with the September renewals.”
Tanzer declined to say whether bonds would be higher than a year ago or pre-pandemic, arguing: “It’s difficult to generalise. We look at each case on an individual basis based on how much customer money is at risk. That is what the regulations say must be protected.
“Where a business is in terms of existing bookings and new bookings will determine what customer money is at risk. In so far as that number comes down, the bond will come down. It depends on a company’s trading profile. We don’t bond anything not required to be bonded.”
Refund credit notes should have been redeemed or refunded by now, but Tanzer said it was “impossible to generalise” about how many deferred bookings members might be holding.
He said: “Clearly bookings have been rolled forward, some more than once. We want to see those become fulfilled travel arrangements, at which point the exposure goes down.”
Abta issued guidance on bonding in December explaining it would allow up to 75% relief on payments made with UK credit cards by UK customers.
Tanzer explained: “We put that out to help members understand the process. We recognise some of the refund liability would be picked up by the credit card companies.”
He insisted this was nothing new, saying: “There hasn’t been a fundamental change in the way we assess bonds.”