Air Travel Trust welcomes first phase of ATOL Reform

Date: 10 July 2012

The Air Travel Trust (ATT) has today published its Annual Report and Financial Statements for the year ended 31 March 2012, reporting a £23.9m fall in the Fund’s deficit to £18.5m.

The report shows that the ATT received income relating to ATOL Protection Contributions of £42.6m during the year, from 17.3m ATOL protected passengers. This is down from 18.5m passengers protected during the previous financial year.

The report details that there were a total of 23 ATOL failures, down from 29 failures during 2010/11, with the total cost to the Fund expected to be £14.2m. In contrast to previous years, no ATOL failures during the year cost more than £10m, after taking into account bonds held by the ATT. The most costly failure was that of Holidays 4 UK Ltd in August. The company provided security to the ATT of £4.5m, all of which was used to meet a proportion of the claims. The remaining claims are expected to cost the Fund £7.2m.

The report covers the period before the introduction of the first phase of ATOL reforms by the Government, which came into force on 30 April 2012. These reforms are expected to benefit consumers in two ways, firstly by leading to more holidays being protected thanks to the introduction of ATOL cover for Flight-Plus bookings; and secondly by stopping the decline in the number of holidays being ATOL protected as agents moved away from selling traditional package holidays.

The ATT Chairman, Roger Mountford, said: “We have consistently supported reform of the ATOL scheme to ensure that consumers receive the protection they expect when they book holidays, and to stem the gradual move away from ATOL protection that has been obvious over the past decade.

“Happily, the first phase of these reforms is now in place, and, with a reduced deficit this year, I look forward to working with Government and the travel industry in the next year to develop thinking on potential medium term reforms to the funding and governance of the ATOL scheme, to be introduced once the deficit on the Fund has been extinguished.”

ATT Report & Financial Statements, 31 March 2012 – key figures at a glance
£18.5m ATT deficit at 31 March 2012
£42.3m ATT deficit at 31 March 2011
£23.9m Reduction in the size of the deficit in 2011/12
£42.7m Total ATT income in 2011/12
23 Failures
14,330 ATOL protected passengers repatriated
67,475 ATOL protected passengers entitled to a refund

The full Air Travel Trust Report and Financial Statements for the year ended 31 March 2012 can be found at ATT Report 2012

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Notes to Editors

1. The Air Travel Trust (ATT) is the primary source of funding when an ATOL holder fails. It is administered on behalf of the ATT by the Civil Aviation Authority (CAA).
2. One of the CAA’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.
3. The ATT’s main source of income comes from the ATOL Protection Contributions (APC) that each ATOL holder is required to make when it accepts a booking under its licence. In some circumstances an ATOL holder will have also provided a bond, or other form of security, which is used in the first instance to protect customers.