CAA’s Atol reform plan ‘clouded’ by Thomas Cook collapse

The CAA has not made the case for “wholesale change” to the Atol scheme, with its view “clouded” by the collapse of Thomas Cook, according to a leading industry consultant.

Martin Alcock, director of Travel Trade Consultancy and a former senior Atol analyst at the CAA, criticised the reform proposals, saying: “We’ve just been through three of the most difficult years ever and the Air Travel Trust fund (ATT) is healthy. What is the case for overhauling the scheme?

“The case hasn’t been made for wholesale change. Thomas Cook has clouded the view of the CAA by allegedly taking full balances in advance and sitting on them.”

After Cook went into liquidation in September 2019 it emerged its agents had been encouraged to offer discounts to customers paying balances in advance.

The failure cost the ATT £444 million. Last week, the fund was revealed to hold £108 million.

Alcock argued: “The big issue is trying to come up with a one-size-fits-all [scheme] for small businesses and vertically integrated groups.

“I don’t see that a well-run business needs a trust account.”

He acknowledged: “Segregation of monies could mean different things. If the CAA is saying everybody needs a separate account and might also need a bond or certain capital requirements, or they would need a trust account, that could be beneficial.”

But he disputed the CAA’s attitude to Atol holders’ use of client money, arguing: “If I take £1,000 for a booking, pay £300 for flights and £600 to a hotel, that is good housekeeping. The CAA sees that as using client money as working capital. Trust arrangements say I can’t do that. But in my view that is not using customer money.”

Scottish Passenger Agents’ Association president Mike Tibbert also criticised the reform proposals, telling the association’s annual dinner in Glasgow: “Smaller agents are likely to be most affected, which is unfair given it’s larger Atol holders that generally [cost the fund the most].”

CAA head of Atol Michael Budge said: “Our reform is intended to increase the financial resilience of the industry and the Atol scheme, with a focus on reducing failures and ensuring Atol remains a robust consumer protection scheme.

“We encourage everyone to respond to our call for evidence with their views by the March 24 deadline.”

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