A relaxation of Abta rules on bonding, including new options for ‘principal’ or tour operator members to meet the association’s financial requirements, have been welcomed by senior industry figures.
Abta gave notice last month of increased bond-renewal options to apply from July 1 as well as changed criteria for assessing members’ finances, to apply from July 2026.
The changes follow criticism of Abta’s bonding demands during the pandemic when it switched to calculating bonds based on the peak amount of customer funds held by members rather than a smaller percentage backed by insurance against a ‘shortfall’ in the event of failure.
More: Comment: New Abta bonding rules should benefit members
Abta bonds provide protection for non-Atol packages and other non-flight arrangements protected by the Package Travel Regulations, as well as ‘pipeline’ money held by retail members (agents).
Pipeline bond levels remain unchanged, but as well as offering principal members a ‘peak-period’ bond assessment as now, Abta will also offer a lower bond backed by insurance through a scheme it calls Principal Premium+.
Leading industry accountant Chris Photi, a regular critic of Abta’s bond requirements, hailed the changes as “significant”, saying: “It makes eminent sense to offer alternatives to peak-period bonding. Smaller firms will have greater access to bonds.”
However, Photi criticised a lack of guidance on how insurance premiums will be calculated.
Alan Bowen, advisor to the Association of Atol Companies, agreed, saying: “If insurance is readily available, this will be positive.” But he noted: “You would have to look at the premiums. It will make a difference to those with larger bonds. Those with small bonds may see little benefit.”
Bowen added: “This is due to members’ demands. A lot of bonds went up after Abta got worried about the level of money people were holding with refund credit notes.”
Abta’s move to peak-period bonds was triggered by the explosion of refund credit notes during the Covid-19 shutdown and by the failure, in July 2020, of Cruise & Maritime Voyages which resulted in a £12.7 million loss to Abta’s ‘captive’ (inhouse) insurer.
Rachel Jordan, Abta director of membership and financial protection, said: “These changes have been warmly received by members.
“They’re designed to simplify rules and processes, with reduced reporting requirements and new flexible bonding options.”
More: Comment: New Abta bonding rules should benefit members