ATIPAC calls for financial protection clarity for UK holidaymakers

Date: 17 July 2014

The Air Travel Insolvency Protection Advisory Committee (ATIPAC) is calling for safeguards to ensure consumers buying holidays from non-ATOL travel companies based abroad, understand what financial protection is provided.

In its Annual Report 2013/2014, the Committee highlights the relocation of Lowcostholidays, a travel company formerly based in the UK, to the Balearic Islands in Spain. It fears consumers are now increasingly unclear how their holidays are financially protected and what elements are covered if they purchase holidays from companies based outside the UK.

Travel companies based in other EU states may sell package holidays in the UK, often online, and still comply with EU law providing they have a protection scheme in place that is compliant with the EU's Package Travel Directive.

The ATOL scheme guarantees holidaymakers flying from the UK a full refund or repatriation if their travel company collapses. ATOL provides a level of protection that is not reflected in all other EU states' schemes, though they may still be compliant with EU law.

The annual report, published today, explains the Committee’s work during the last 12 months, along with commentary and analysis of the air travel industry.

John Cox, Chair of ATIPAC, said:

“It is currently unclear what level of protection Lowcostholiday customers would receive. It appears that, in the event of failure, consumers on holiday would have to repatriate themselves and then make their claims in the Spanish courts.

“There is a concern that other companies could follow suit and relocate to another EU state, not only to benefit from lower overhead costs but also to avoid the ATOL Protection Contribution.

“Consumers must be made aware of the risk that a holiday booked with a company not based in the UK may have a lower level of protection than provided with ATOL.

“We need to provide safeguards against companies relocating to other cheaper jurisdictions in a ‘race to the bottom’ that may not provide consumers with suitable protection against their financial failure.”

In the last year ATIPAC provided a comprehensive response to the Department of Transport’s (DfT) ‘Call for Evidence’ in connection with future ATOL reform. As part of its response the Committee said the two current systems of financial protection for holidaymakers should be amalgamated.

These are: the ATOL scheme, which is managed by the Civil Aviation Authority on behalf of DfT and covers air based holidays; and non-ATOL packages, financially protected under the Package Travel Directive by approved bodies, such as ABTA, covering surface transport-based travel and falls within the responsibility of the Department for Business Innovation and Skills (BIS).

Furthermore ATIPAC suggested there should be a single Government department responsible for travel protection schemes, in order to reduce the administrative burden, inefficiencies and give greater clarity to consumers.

John Cox added: “The administration, and consequently the cost, of administering multiple protection systems is burdensome. One clear system covering both ‘licensable’ and ‘non-licensable’ would be simpler and less costly.”

The report also highlights ATIPAC’s response to the BIS ‘Call for Evidence’ on the European Commission’s Proposal for a New Directive on Package Travel (PT) and Assisted Travel Arrangements (ATA). In addition the Committee has agreed the CAA’s Pack Peace of Mind campaign, which publicises the ATOL protection scheme, should be ‘reinvigorated’.

To interview John Cox, Chair of ATIPAC, please contact the CAA press office on 020 7453 6030.

Click to read the ATIPAC annual report

Notes to Editors
The Air Travel Insolvency Protection Advisory Committee was established by the Secretary of State for Transport in 2000 to keep under review and provide advice to the Civil Aviation Authority, the Trustees of the Air Travel Trust and the Secretary of State for Transport on the financial protection arrangements for air travellers and customers of air travel organisers. The committee’s members include representatives of all the main travel trade bodies and independent and consumer representatives, as well as the CAA. Details can be found in the report.