16 Nov

ABTA says Government must get ATOL reform right

With the Department of Transport proposals on ATOL reform rapidly approaching ABTA is renewing its call on the Government not to waste this golden opportunity to radically reform the scheme. ABTA has raised its concerns in discussions with Aviation Minister Theresa Villiers and other Department for Transport officials after a series of failures over the last two years highlighted the limitations of the scheme and severely damaged public confidence.

Excel in 2008, Freedom Direct in 2009, Goldtrail and Sun4U in 2010 , all revealed the limitations of the current ATOL scheme with some customers being protected and thousands of others left stranded and out of pocket. The current systems of financial protection are confused and confusing both for the public and the travel industry. Changing booking habits, the internet and no frills carriers have created a vastly different world for the travelling public. A simplified, comprehensive and unified protection scheme is essential to restore customer confidence. This will be of immense benefit to the travel industry at a time when business is in desperate need of positive support.

Financial protection should not be an optional add on. 93% of the public* regard it as essential or important. In their responses to consultation questionnaires, 85% of ABTA Members said that they wanted to see the scope of consumer protection extended to all holidays; 84% that click throughs from airlines websites should be included; and 100% said that airlines should be included in a scheme of financial protection with 20% of these saying that it should however be optional rather than mandatory.

In a recent interview with ABTA, Aviation Minister Theresa Villiers, was asked for her views on financial protection, restoring consumer confidence and reform of the ATOL scheme. She responded saying:

“The current system of consumer financial protection needs improvement; there is no doubt about that. When it was set up, the sector looked remarkably different. We are looking hard for what is actually deliverable, and hope to deliver it soon. Reform of ATOL will help significantly to encourage consumer confidence, and that is why we’re working so hard on getting it right.’

Mark Tanzer ABTA Chief Executive said: “Positive reform of the ATOL scheme is long overdue. We must reinforce consumer confidence in the travel industry. The Government clearly agrees that a modernised, easy to understand system is essential. If it wants to achieve that result it must pay attention to our recommendations. Our customers and our Members deserve better than the unfair, unbalanced confusion that we have suffered in recent years. An opportunity for real and beneficial change has arrived, it must not be wasted.”

ABTA believes:

• Airlines should be included in schemes of financial protection
• Financial protection schemes should be comprehensive and clear and transparent to both customers and the trade
• The costs of providing the security provided by travel companies should not be at a level that drives customers to choose cheaper travel options outside of the protected regime
• Financial protection schemes should not increase travel companies’ contractual, taxation or other liabilities
• There should be effective and robust enforcement of regulations implementing financial protection schemes
• The statutory scheme of financial protection should operate without creating unnecessary duplication of protection costs [For example, credit card companies taking security for turnover that should already be protected by the ATOL scheme]

* Consumer research was conducted by Arkenford Ltd (www.arkenford.co.uk) who specialise in tourism and leisure market research.  The ABTA Consumer Trends survey generated response from a nationally representative sample of 2,028 consumers using an online research methodology and related to holiday booking habits in the 12 months to September 2010.  Fieldwork was conducted in September 2010.