Air Travel Trust deficit highlights the need for change

Date: 05 July 2011

The Air Travel Trust (“ATT”) has today published its Annual Report and Financial Statements for the year ended 31 March 2011, reporting an increase in the deficit to £42.3 million.

The report shows that the ATT received income of £47.7m during the year; substantially from ATOL Protection Contributions for 18.5m ATOL protected passengers.

The most significant impact on the Trust arose from the insolvency of Goldtrail Travel Limited, going into administration at the height of the 2010 summer holiday season. The circumstances around this failure are under investigation. This failure highlighted the poor standards of customer documentation issued by some in the travel industry; leading to unacceptable delays in refunds to holidaymakers.

The Trustees welcome the Government’s consultation on secondary legislation to introduce reform of ATOL from January next year. The report records that 29 ATOL holders failed during the year to 31 March 2011, and because of the ATOL scheme, over 47,000 ATOL protected passengers were to able to complete their holiday and around 146,000 received a refund of advance payments.

In parallel to the ATOL reform consultation, the ATT is considering amendments to its payment policy. This action follows on from changes made to the policy earlier this year, highlighting the importance of issuing customers with the correct documentation for their holidays. It is hoped the proposed revisions will provide even greater clarity to industry of the requirements and the documentation that should be issued to their customers.

The ATT Chairman, Roger Mountford, said:

“Despite the Trust facing an increase in its deficit, largely caused by the failure of Goldtrail Travel Limited, it has continued to meet its objective of providing refunds to customers affected by the failure of their ATOL holder. This past financial year has seen the Trust either repatriate or refund a record 193,000 UK holidaymakers. Government has published its consultation on reforming the scope of ATOL and bringing clarity to consumers, the trade and the ATT as to who is covered by the ATOL scheme. We look forward to a decision by the Government to proceed with a reform that is clearly in the public interest.”

ATT Report & Accounts, 31 March 2011 – key figures at a glance

£42.3m deficit of ATT at 31 March 2011
£10.5m increase in deficit
£47.7m income
29 failures
£46.8m net cost of failures (that occurred in the year or during previous years)
47,013 ATOL protected passengers repatriated
145,809 ATOL protected passengers entitled to a refund

Ends

Notes to Editors

The Annual Report and Financial Statements for year ending 31 March 2011 is available to download here

The Air Travel Trust Fund is the primary source of funding when an ATOL holder fails. It is administered on behalf of the Air Travel Trust by the Consumer Protection Group (“CPG”) of the Civil Aviation Authority (“CAA”).

One of CPG’s principal responsibilities is to manage the Air Travel Organisers’ Licensing (“ATOL”) scheme, which provides protection to holidaymakers from being stranded abroad or losing money when purchasing air holidays and flights from licensed tour operators. If an ATOL holder fails, the CAA is responsible for ensuring customers are either repatriated back to the UK or receive a refund of payments made.

The ATT’s main source of income comes from the ATOL Protection Contribution (“APC”) that each ATOL holder is required to make when it accepts a booking under its licence. In some circumstances a ATOL holder will have also provided a bond, or other form of security, which is used in the first instance to protect customers.