31 Mar

Main points from ABTA’s response to the CAA’s request for information 

ABTA has consulted extensively with members and the financial services industry over the last six weeks to gather feedback to inform its response to the Civil Aviation Authority’s (CAA) request for information on ATOL reform proposals.

The engagement included an all member video conference call and survey, meetings with ABTA’s FTO and Policy Advisory Groups, and 11 Financial Protection Focus Groups which brought together members, partners and financial services providers including banks, insurers, merchant acquirers, bond providers and trust providers. 

ABTA’s response was submitted to the CAA on Friday 31 March. One of the points ABTA has made repeatedly, including in its formal response, is the lack of clarity on the rationale for reform. ABTA says the COVID-19 pandemic demonstrates that resilience in the sector is strong and the ATOL scheme stood up well during this time, so questions what the reforms are trying to achieve. 

The following summarises the main points raised by ABTA in its response to the CAA:

  • Alignment is necessary between the Department for Transport (DfT), Department for Business and Trade and the CAA. These government departments and the CAA need to work together to ensure there is consistency between the financial protection arrangements available in respect of flight and non-flight packages. With both ATOL and the Package Travel Regulations (PTRs) under review, there is an opportunity to ensure an aligned approach which would help reduce regulatory complexity and reduce cost for travel businesses. 
  • ABTA members remain very strongly in favour of having a range of financial protection methods (i.e. bonds, insurance, and segregation) available to travel businesses to meet their regulatory obligations. A one-size fits all approach will not work and is not appropriate, and this is a view which is shared by financial services providers. 
  • There is large-scale opposition to mandatory segregation of customer monies, whether by way of trust account, escrow or client account, across the UK travel industry. There is also skepticism about the ability of many businesses, especially, though not exclusively, SMEs, to adapt to any requirement to ringfence customer monies given the nature of travel business – with many suppliers requiring payment for services, like hotel rooms, up front.
  • Bonding remains a popular form of financial protection. Many members report it is the simplest and most cost-effective method of financial protection available for their business. It is also worth noting that while, during the pandemic, the bonding market narrowed, it is expanding once again with more options available.  
  • There is a lack of clarity about what the CAA is trying to resolve by introducing variable APC and a concern variable rates could distort the marketplace. Members have also raised concerns around the additional complexity that variable APC will introduce into the ATOL scheme. Whilst there is some support for a variable approach to the APC by some members, it is difficult for members to provide constructive feedback on the CAA’s proposal to introduce a variable APC without having any understanding of how the CAA believes this would work in practice.
  • Section 75 protection and chargeback rights need to be taken into account as part of the overall consumer protection already in place, which reduces the risk faced by the ATTF. Many customers pay for their ATOL holiday with a credit card, providing them with consumer protection, and this results in fewer claims to the CAA in the event of a failure. 

ABTA members and Partners can view the full response on ABTA’s website here.


Notes to editors

ABTA is a trade association for UK travel agents, tour operators and the wider travel industry. We’re the largest travel trade body, with over 3,900 travel brands in membership who have a combined pre-pandemic annual UK turnover of £40 billion. We work closely with our members to help raise and maintain standards and build a more sustainable travel industry, and provide travellers with advice, guidance and support.

Our members sign up to a code of conduct and commit to agreed service standards and fair trading. When you need clear travel information, and accurate and impartial advice relating to your trip, we’re here for you. We’ll help you understand your level of financial protection, and what to do next, in the unlikely event that an ABTA member goes out of business. So, whatever happens, when you book with an ABTA member, reliable advice comes as standard. This means that booking with our members brings peace of mind. Together with our members, we help you travel with confidence. www.abta.com