News & Events

News & Events

Gary Lewis writes for Travel Weekly on ATOL Reforms

I have just spent the last four weeks on the road with my team and the CAA meeting our membership, addressing the new ATOL reforms and demonstrating the solutions that we can offer them. As a Group we are ready for the 30th April launch and have thought through and implemented three options which give our members a number of choices enabling them to be compliant.

In my view Flight Plus is a stepping stone to a future that will have one badge of protection. That badge will now be an ATOL badge. But on reflection, shouldn’t it have been an ABTA badge?

ABTA is one of the most powerful consumer brands in the UK travel industry, recognised widely by consumers who many believe offers 100% financial protection. However, all of us in the industry know it doesn’t stand for that any longer. Passing liability back to Principals, credit card companies and even ABTA agents themselves, has left many wondering what the ABTA brand stands for and members questioning why they remain members.

Seven years ago our industry had a chance of self regulation. It was clear that the Online Travel Agents [OTA's] were dynamic packaging, claiming they were agents for flights and agents for accommodation, and then selling the flights and accommodation to the customer as a holiday. This rode rough shot over the out-dated package travel regulations and side stepped the need to hold an ATOL and therefore financially protect consumers.

Entrepreneurs, many of which were TTA members, followed this growing market and took full advantage of the explosion in No Frills Airlines and the growth of the Bedbank, fully capitalising on the trend away from the traditional package holiday and into dynamic packaging. The difference for TTA members was that whilst they did not hold an ATOL, they were able to offer their clients 100% financial protection because they were part of the TTA.

Some ABTA members were also dynamically packaging, but without holding an ATOL and not paying for financial protection we had the crazy scenario where a travel company could fail, and because the client had purchased accommodation only and flight only as two separate components, they were not financially protected by anyone. This got even crazier, when Freedom Direct Holidays failed in 2008. They held an ATOL and an ABTA badge yet both organisations were arguing over who should pick up the liability for the non packages.

At the time of the Dynamic Packaging boom, ATOL, ABTA, TTA, AITO and the top 20 ATOL holders all believed these OTAs should be financially protecting customers. As membership organisations we started talking about self regulation to force the OTAs to protect the holidays they were selling. Then ABTA changed its mind. I don’t know why exactly, I can only speculate. But we all know the consequences for this change of direction: Five court cases, ABTA v CAA twice, CAA v Travel Republic three times, and finally an act of Parliament to force through the new Flight Plus.

So how should we feel about these new regulations? I know how many traditional high street retail travel agents feel about them, because they’ve told me on my four week road show. They feel they have been hit by a sledge hammer which was swung to hit the OTAs, but in doing so has also hit the high street retail travel agents. And I agree with them. Sadly, however, they have also been impacted because the Department for Trade and Industry, guided by the CAA, have had to bring the OTA's into ATOL without the support of ABTA. ABTA could have self regulated and targeted the OTAs who were selling mass market holidays. Now every travel agent has been caught by the new regulations.

We now have the crazy position where a package sold to a customer with an overseas car hire added from a different supplier needs to hold an ATOL to sell the car hire. If you are a high street retail travel agent selling 20 of these a year, you are most probably going to stop selling them. We saw a similar situation when the FSA had the bright idea of bringing travel insurance under the FSA selling rules. The admin burden simply resulted in many travel agents stopping the selling of travel insurance - and you now have more people travelling without travel insurance that were ever miss-sold by a travel agent.

I believe that the next step will be for the CAA to bring the airlines selling add-ons into the financial protection pot, and ultimately that the ATOL badge will become the kite mark of UK financial protection for customers. With the right marketing, the ATOL Certificate will become second nature to UK consumers, and underpinning that kite mark will be entrepreneurial businesses like ours that not only operate a robust and successful financial protection model but who are ATOL-badged today.

What ABTA needs to ask itself is do they want to be in financial protection any longer or should they focus on their lobbying and code of conduct activities, leaving those that can offer consumers complete peace of mind to do just that.

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