Protection reform will impact cash flow for some agents

Commenting on today's announcement about ATOL reform, Bob Atkinson, travel analyst from price comparison website travelsupermarket.com, says:

"Today's announcement of the new Flight Plus system is certainly a good start. Anything that will ensure more UK holidaymakers have both full financial protection and clarity on what they are covered for is to be applauded.

"In particular we welcome the proposal to clean up the confusion of what is and what is not a package holiday, so that any agent selling travel has to be crystal clear to the consumer as to what they are getting. And with this being backed up by clearer documentation, more holidaymakers will be able to book and travel safe in the knowledge that they will be looked after should things go wrong.

"However, there are a number of travel firms out there who will now have to take a long hard look at how they operate, should the proposals come into force. They will become fully liable for their customers if they choose to take on the ATOL licence, which has potential implications in terms of cash flow and liability insurance. Many others will instead stop selling ‘packages' created from cheap flights and holidays and force customers to either spend more on fully ATOL protected trips through their agent, or encourage more DIY bookings away from agents where holidaymakers receive no protection at all but still access a cheap overall deal.

"The UK travel industry has no consistent protection for travellers which comprehensively covers all booking methods. Whilst the ATOL protection scheme offers an excellent security blanket to those taking package holidays, many other travellers - such as those booking flights only - will still fall outside the protection scheme. Even if the new proposals were in place a couple of years ago, some passengers would still have been without protection when affected by the high profile collapses of the likes of XL.com, Globespan, Goldtrail and Kiss Flights.

"In short, the reforms do not go far enough. What the UK travel industry needs is a complete overhaul of customer protection for all forms of travel purchase, together with an overseeing body that can impose regulations and enforce customer rights across all travel providers in a consistent format.

"This reform proposal made today takes a step in the right direction, but there is still a long way to go."

With permission from Travelmole

Where's the detail, says travel law professor

David Grant, Vantage Insurance's Professor of Travel Law at Leeds Metropolitan University, comments on today's ATOL reform announcement:

"Theresa Villiers statement today on ATOL reform tells us little new. The extension of the ATOL scheme to ‘flight plus' was flagged up over a year ago as was the possibility of bringing ‘click throughs' into the system

The travel industry has had a long time to chew over these proposals and what they need now are more details not more statements of principle.

What will make up the ‘plus' in ‘flight plus'? Accommodation certainly, car hire probably. But what about attraction tickets or theatre tickets or car parking? And what if the accommodation consists of a night in an airport hotel before departure - will that count? And within what timescale must the ‘plus' element be purchased to qualify - 7 days, 14 days, a month or right up to the time of departure? There are few answers to these questions in the statement.

What the statement avoids saying is that the government has again failed to grasp the nettle of airline insolvency. If an airline supplying the ‘flight' part of ‘flight plus' goes bust then it is the travel agent who will have to pick up the tab - turning a travel agent into a quasi tour operator with all the financial burdens that that entails. Airlines go bust in Europe all the time - why should there not be a scheme which deals directly with problem rather than shuffling it off onto travel agents?

The proposals on ‘flight plus' however are good news for consumers because they do result in a much needed extension of protection in cases of airline insolvency - although whether it will remove the uncertainty over whether a holiday is protected or not is dubious. It has certainly moved the goalpost in favour of consumer protection but large gaps still exist - in particular ‘flight only' when bought direct from an airline or on its own from a travel agent. This is regrettable given that one of the main drivers of the reform was to eradicate this kind of uncertainty.

As for ‘click throughs', there seems to be no mention of this in the Minister's statement - which is not surprising given that the original proposals were not put forward with any great enthusiasm and were hedged around with caveats. Reading between the lines it looks as though nothing will be done about ‘click throughs'. Given that that this was one way of catching airlines in the net it looks like another weakening of Government resolve."

With permission from Travelmole

Industry reacts to today's ATOL reform announcement

The Government has officially announced today that it is considering widening ATOL protection to airlines.

Announcing its plans for the "biggest overhaul of financial protection for holidaymakers in more than a decade" it said views are also being sought on potential reforms which would require primary legislation.

"These could include bringing holiday sales by airlines into the scheme along with those arranged on an 'agent for the consumer' basis," said a statement by the Department of Transport.

If approved, this new legislation could come into force by May 2013.

In its announcement today, the Government also confirmed plans to:

- extend the ATOL scheme to "flight-plus" holidays comprising a flight and other holiday component bought within two successive days

- ensure everyone booking ATOL protected holidays will get a recognisable ATOL certificate confirming their rights under the scheme for refunds and repatriation should their travel company fail

- help ensure that 'agent for the consumer' businesses arranging holidays are fully aware of their legal responsibilities to consumers.

In a huge document outlining its plans, the Department for Transport clarified that ATOL holders under the Flight-Plus scheme will not be brought within the Package Travel Regulations which apply to tour operators.

It also puts agents minds at rest that they will not become liable for VAT under the Tour Operators Margin Fund (TOMS).

Subject to the responses received, the Government aims to respond to the consultation in the autumn, with a view to introducing the necessary legislation by January 2012 to capture the peak holiday-booking period for next summer.

It said the consultation also paves the way for further potential reforms to the ATOL scheme in the medium to longer term, seeking initial views to inform more detailed work to be undertaken by the Civil Aviation Authority later in the year.

Aviation Minister Theresa Villiers said:

"We have always been clear about our commitment to modernising the ATOL scheme, and these proposals are an important step towards achieving just that.

"As well as ensuring up to six million additional holidays are protected, these proposals will help steer the scheme's finances on to a more sustainable path for the future. We are also making an important step forward on the debate on delivering a wider reform of ATOL in the future."

Today's consultation - which closes on 15 September - follows an announcement in February which outlined the approach the Government would take to reforming the ATOL scheme.

Noel Josephides, AITO Council member, said:
"AITO is very happy that this has come out at last and we see it as the first step forward in bringing the whole customer protection up to date.

"It will hopefully improve consumer protection and level the playing field and it is heartening to see that the government is going further to protect travel arrangements that look like packages.

"AITO will work to make sure the pitfalls for customers of companies acting as agents will be pointed out and constantly monitored."

Jonathan Wall from Elman Wall Travel Accountants said: "Those whose business model relies on staying outside regulation which protects holidaymakers who give those companies monies upfront will find themselves under more and more pressure.

"Those who focus on loopholes are playing a short term and self defeating game-the CAA are committed to closing down loopholes over time.

"Most travel businesses recognise that holidaymakers should have complete financial protection and will consider during the consultation period how they can integrate new processes and procedures into their operations quickly and efficiently."

He urged those with considered views to respond to the consultation as these can help in the shaping of the detail.

With permission from Travelmole

ATOL changes don't go far enough, says ABTA

ABTA chief executive Mark Tanzer is calling on the Government to go even further with its ATOL reform following the publication of a consultation paper today.

"I am pleased that some of the detail behind the proposals is now available for scrutiny," he said.

"However, I am still concerned that the exclusion of airlines and the lack of clarity around click-through arrangements will leave many consumers unprotected, and will distort competition in the market.

"It's encouraging that the consultation explicitly acknowledges this as an issue, and it's critical that the consultation process results in a Government commitment to bringing airlines into scope."

He said ABTA would now work through the detail of the proposals with members to "make sure that what emerges is practical and fair".

"ABTA has long advocated the broadening of consumer protection, but much work remains to be done before we can endorse the proposals as a workable and affordable solution," he said.

The Department for Transport's proposals for reform of the ATOL scheme for flight-based package holidays was unveiled this morning (see earlier story).

In it, the Government recognised that inclusion of airlines in the scheme would "provide complete clarity for consumers" and that it will consider primary legislation to effect this.

ABTA said it believes that there will be no comprehensive solution until all airlines protect their flights against insolvency risk.

TUI said it fully supports the intention to extend the ATOL scheme to ‘flight-plus' holidays which comprise of a flight and other holiday component.

"We also endorse the decision by Government to consider widening ATOL protection to include holidays sold by airlines," said a spokesman.

"Only once such a step has been taken can customers benefit from a truly level playing field. In addition, we welcome the Government's intention to legislate to prevent those who might seek to avoid the ATOL scheme by claiming to act as an agent for a customer."

With permission from Travelmole

ATOL reform delayed until April

The travel industry has succeeded in persuading the Government to delay its ATOL reform deadline from January until April.

The Minister of State for Transport Theresa Villiers said it accepted that the industry would have insufficient time to make the necessary preparations to comply with the new requirements.

"This is partly due to the time needed to update IT systems and put in place the processes required to enable businesses to identify when a Flight Plus holiday has been formed," she said.

"I expect to make a further announcement before the end of the year about decisions on the other ATOL reform issues in the consultation."

ABTA chief executive Mark Tanzer said: "We are pleased that the Government has listened to our concerns, and those of the entire industry, on timescales: the January 1st implementation timetable had become untenable.

"This shows how important it is for our members, and the industry as a whole, to put our views to the Government in a robust way.

"While we support the current proposals as a first step towards improving the system of financial protection, the inclusion of holidays sold by airlines is an essential second step.

"Further, there are still important areas regarding the principles and practicalities of the reforms that need to be addressed by the Department for Transport and Civil Aviation Authority, we look forward to continuing to work closely with them on these.

"With a December announcement now expected by the Government, travel businesses must be given enough time to make necessary preparations, even with an April implementation timetable."

With permission from Travelmole

ABTA to support phased introduction of ATOL reforms

ABTA says it would support a phased introduction of ATOL reforms after the Civil Aviation Authority admitted today that they could not be fully implemented by April.

CAA consumer protection group director Richard Jackson told a parliamentary transport select committee that businesses will not be expected to fully comply until October.

He said the CAA acknowledged that the industry wouldn't be ready by April 6 because it is still waiting for the Department for Transport to publish details of the reforms. The industry has been waiting for these since last October.

ABTA chief Mark Tanzer said: "We want the reforms to be as workable and practical as possible for UK travel businesses.

"We believe a phased introduction would be more practical for the industry, with the launch of the reform following the CAA consultation, and key requirements such at ATOL Certificates and agency agreements introduced later in 2012."

With permission from Travelmole

ATOL reforms to start on 30 April

The Department of Transport has confirmed changes to the ATOL system will come into effect on 30 April.

Aviation minister Theresa Villiers made the long awaited announcement today which means "Flight-Plus" holidays sold by tour operators and travel agents will now be included in the ATOL scheme.

These are holidays that look like package holidays but are sold in a way which currently falls outside the scheme.

Passengers will be given a standard, recognised certificate at the point of purchase, so they know whether their trip is protected by the ATOL scheme or not.

To give the travel trade sufficient time to prepare for the certificates, this requirement will come fully into effect on 1 October 2012.

The CAA recently acknowledged that the industry wouldn't be ready for the ATOL changes by April 6, see previous story and ABTA chief Mark Tanzer supported the suggestions of a phased introduction for the scheme.

He said: "We want the reforms to be as workable and practical as possible for UK travel businesses.

"We believe a phased introduction would be more practical for the industry, with the launch of the reform following the CAA consultation, and key requirements such at ATOL Certificates and agency agreements introduced later in 2012."

With permission from Travelmole

More details here:
http://www.travelweekly.co.uk/Articles/2012/02/09/39545/flight-plus+what+the+government+has+changed.html

David, do you know if this affects holidays booked after 1 October or for travel after 1 October?

luci

Hi luci ... my understanding is that the new Flight Plus ATOL comes into force on 30 April, applying to new bookings from that date. The requirement to issue customers with an ATOL certificate when the first payment is made comes into force on 1 October, applying to new bookings from that date.

David

Thanks David.

luci

Agents fail to grasp Flight Plus implications, says insurer

Insurer International Passenger Protection says travel agents are still unaware they will be liable for the financial collapse of a supplier if they become new Flight Plus licence holders.

Its warning came following the collapse this month of Air Australia, which left hundreds of passengers stranded.

"We are seeing many agents still not grasping the actual liabilities they could face, no different to existing ATOL holders, with agents still convinced that their ATOL covers the collapse of not only them but anything they sell," said IPP director Paul Mclean.

"ATOL will only cover the collapse of anything the agent sells if the agent themselves collapses at the same time, otherwise the agent is always responsible for anything they sell."

IPP also said it was disappointed the new ATOL certificate to be introduced later this year will only be issued to customers buying ATOL-protected holidays. It said certificates should be issued for all sales, to make it clear which holidays weren't protected so customers had the option to protect their holidays if they wished.

Agents still confused over ATOL reform changes

Travel agents are still confused about the implications of Flight Plus despite a huge education campaign on ATOL reform across the industry.

The CAA has just launched its new guide to ATOL reform which will be sent to thousands of agents so they can read up on the changes.

Our Mole poll found that three quarters of agents are still unsure, with more than 75% of agents saying they do not understand the implications of Flight Plus.

Insurer International Passenger Protection has already said travel agents are unaware they will be liable for the financial collapse of a supplier if they become new Flight Plus licence holders, see previous story.

Andy Cohen, head of ATOL at the CAA said the simple guide, which includes case studies, will really help staff get to grips with the way protection for holidays is changing.

Entitled ‘Improving holiday protection: your guide to how ATOL is changing', the new guide covers the key changes to the scheme such as the introduction of Flight-Plus and the new ATOL certificate.

iBook and PDF versions are also available to download so agents can easily use the guide at their desk, at home or on the move.

Andy Cohen, Head of ATOL at the CAA said: "Everyone from senior management to counter staff needs to be aware of how the changes will affect their business, so we are working extremely hard to help the industry get ready for 30 April."

In addition to the guide, the CAA's ATOL education campaign will also see CAA representatives speak at over 50 events in the coming months.

With permission from Travelmole