TravelSupermarket comments on ATOL changes

Published:

26/04/2012

Topic:

Press Release,Travel

Changes to ATOL protection due to come into force at the end of this month are set to increase protection for holidaymakers, but do the changes go far enough?

• Plus a guide to what changes are coming into place and what they mean for consumers

Bob Atkinson, travel expert at TravelSupermarket said: "With the revised ATOL reforms taking effect from the 30th April, we finally have some really great news for millions of British holidaymakers. The Flight-Plus scheme will ensure that the holiday monies of millions more trips will now come under the ATOL protection scheme when they buy flights and accommodation that are essentially a 'package' holiday.

"Those booking holidays from the 30th April should be actively looking for ATOL protection wherever possible and proactively asking questions about the protection scheme, to ensure that they have their holiday covered in the event of a company collapse. Your travel supplier should be able to clearly tell you the type of cover that is offered on the holiday you are buying, whether this is in person, by phone or online.

"And from the 1st October consumers must be issued with a standard document detailing this cover - the newly introduced ATOL certificate which will go a long way in clarifying this matter for consumers.

"However, there is still work to be done to ensure all flight customers have protection.  These reforms still leave a huge number of additional 'holiday' sales uncovered, including those booked through airlines and for flight only customers booked through airlines. For those who chose to make their own arrangements, or who request a flight and hotel from the same company more than two days apart, their 'holidays' will remain protection free.   We look forward to the forthcoming Civil Aviation Bill and Government intentions to consider this area.

"In the meantime, as ever we encourage all Brits buying their holidays to follow our three golden rules to minimise the risk of financial loss;

• Wherever possible book an ATOL or a Flight-Plus covered holiday. If in doubt ask the company you are booking with if they are covered and if in doubt that the licence is genuine then check the licence with the CAA. However it must be your arrangements that are covered by the licence, NOT that the seller actually holds a licence.  From 01st October you must be provided with an ATOL certificate to demonstrate the cover that applies to your booking. Until then there exists the possibility for confusion as to what protection is in place.
• Pay by VISA or Mastercard debit card for charge back protection or by credit card you can receive protection under the Consumer Credit Directive for transactions over £100.
• For all holidays without protection you should have an insurance policy to cover End Supplier failure. This protects you against loss due to the collapse of a part of your holiday or the ability to re-book the failed element without incurring the additional costs, dependent on your policy.

"Taking these steps gives you 'belt and braces' protection for your hard earned money should any part of your holiday fall apart due to company failure."

Changes to the Consumer Protection of holidays - going live on 30th April 2012 - the TravelSupermarket guide

What Consumer protection is in place now?

Currently there is the CAA ATOL scheme (Civil Aviation Authority) which is fundamentally underwritten by the UK Government. This is the Air Travel Organiser's Licence, first introduced in 1973 as a way of protecting consumers who purchased a 'package holiday' from the failure of a tour operator.  Over the years there have been some revisions of the scheme along with changes to the definition of the term 'package holiday' the latest being the update in 2008 by the Department for Business Enterprise and Regulatory Reform of 'What is a package'

So if there is protection there, why does there need to be a change?

Since the inception of the scheme, the way that we book our holidays has changed dramatically. Not only do many consumers book their own trips now, without using an agent, many agents have offered arrangements with separate flights, accommodation and car hire from differing suppliers, meaning that the 'holiday' booked is not actually covered under the terms of the ATOL scheme.

When companies collapse this exposes the confusion to the consumer of what holidays have protection and which do not. We have all seen TV and press reports of customers who have not only lost their holiday, but often their money as well.  We have also seen instances of on-going disputes over whose responsibility it is to pay out, with the consumer often losing out. Large scale collapses such as XL.com, Sun4U, Libra and Goldtrail along with Kiss have highlighted this.

Additionally the volume of ATOL protected holidays has been falling as more and more non-packaged breaks are sold as a total percentage of overseas leisure trips. 

The changes are required to increase the coverage of protected trips and to make it clear to a consumer what is covered and what is not.  It looks to eradicate the scenario where two separate people can be booked onto the same flight and into the same accommodation, yet one is covered by ATOL and one is not.

So what are the changes to consumers?

1. Flight-Plus. On 30th April 2012, a new type of ATOL cover will be introduced alongside the existing coverage for packages and flight only - this is called Flight-Plus. It is intended to tackle the huge number of trips that are booked with separate flights together with accommodation and/or car hire that currently go unprotected. This means that many 'deals' booked online, via call centres and in travel agents which did not have cover will now enjoy a level of protection.
2. Clarity on what is covered and what is not - all retailers will have a responsibility to make it clear what is covered under ATOL regulations and what is not during the sales process.
3. ATOL certificates - from the 1st October 2012 it will become compulsory to issue a standard certificate to consumers detailing exactly what is covered and what is not, together with what to do when a company collapses. This will speed up claims and each certificate will have a unique reference number.  This will apply to all arrangements. Some sellers are ready to issue these now; many may not be ready until the cut-off date.

How does Flight-Plus protection work?

Flight-Plus only kicks in if you request a flight with accommodation and/or car hire within a certain time frame from your travel supplier. If the retailer does not sell you a traditional, fully packaged break and instead puts together a flight with hotel/car hire, then Flight-Plus will apply. However the request for these items MUST be made within one day of each other in order for Flight-Plus to apply. So if you ask for a flight one day and then the hotel the next, Flight-Plus applies, but if you ask for the flight one week, then add the hotel the next, then the Flight-Plus cover will NOT apply. And it does not matter if the 'seller' of the travel arrangements is placing the business with a third party; the seller has to cover the Flight-Plus protection.

Additionally it is important to remember that it is when the consumer REQUESTS the arrangements, not when they are actually BOOKED.

The Flight-Plus covers arrangements for trips beginning in the UK, however they do not apply to UK travel only. The trip must last 24 hours or include an overnight stay.

Business travel arrangements are NOT covered by Flight-Plus.

So what happens if something goes wrong with my holiday?

If you have a holiday booked under the normal ATOL packaged holiday category, either direct or with someone acting as an agent for that company, then it is business as usual. For those who are overseas at the time of a collapse, then the holiday continues as normal and you are brought home by the CAA. For those with forward bookings you apply for a refund via the CAA. Therefore the protection offered by the likes of Thomson, First Choice and other tour operators remains unchanged.

For Flight-Plus bookings, if something goes wrong with the elements booked (flight, accommodation, car hire etc.) then it is the ATOL holder's responsibility to either find an alternative or to offer a full refund to the consumer. However if the ATOL holder itself goes under, then the CAA will allow passengers overseas to continue their holidays. For those who have forward bookings, the CAA will aim to find a way for the holidays to continue, however if this is not possible then consumers will be able to apply for a full refund.

And what about those who sell travel, what are the changes for them?

Anyone selling travel will need to ensure they have agreements with all their suppliers in order to act as a retail agent for an ATOL holder. And ATOL holders will need agreements with any agent who sells on their behalf.

If they do not have this, then they will need to have applied for their own ATOL licence in order to sell to you the kind of arrangements covered by Flight-Plus. This ensures that cover is in place for anyone selling something that to all intent and purposes resembles a package.

For those now selling holidays under Flight-Plus with their new ATOL licence, they will need to pay the £2.50 APC (ATOL Protection Contribution) per passenger levy paid into the fund that covers failures. This is the Air Travel Trust Fund administered by the CAA and underwritten by the UK Government.

The CAA has stated that sellers who can demonstrate that they have taken reasonable steps to comply with the new regulations/apply for the licence etc. will not be prosecuted for failing to sell with the correct licence during the month of May, however once the first month is over then compliance will begin in earnest.  The travel trade has warned that many agents will just not be ready in time, leaving consumers vulnerable if the CAA does not police this properly.

From the 1st October ATOL holders must start issuing the new standard ATOL certificate. In the meantime they must follow interim guidelines to ensure customers are informed of the ATOL cover they have for the sale.

Are there scenarios where the extension of cover does not apply to consumers?

Most definitely - if you request to book items on days that are more than one day either side of each other then they are not covered, regardless of the when the booking is actually made.
Flight only plus tickets for an event are not covered unless booked with accommodation or car hire. Plus most flight only sales are not covered as the majority have their tickets issued within 24 hours of the sale (e-tickets). Only a small number of flight only sales will require an ATOL licence.
All self-built 'DIY' trips will remain uncovered by ATOL. Importantly sales made via airline websites are not included within the protection scheme. UK trips are not covered. Business travel arrangements via a corporate supplier are not covered.

Some sample situations provided to the UK travel trade by the CAA

Flight-Plus - Mrs Jones requests and buys a flight to Orlando with hotel accommodation for her family over the telephone from a travel business.
Not a Flight-Plus - Mrs Jones buys a flight to Orlando and tickets to Disneyland for herself and her husband on the internet from a travel business. This is not a Flight-Plus because accommodation or car hire must be included in the request to constitute a Flight-Plus.

Flight-Plus - Mr Wilson requests and buys a flight to Orlando from a travel business on the high street. The next day he requests to book car hire from a travel business and two days later books the car hire with the travel business.
Not a Flight-Plus - Mr Wilson requests and buys a flight to Orlando from a travel business over the internet. A week later he goes back online and books car hire with the same travel business. This is not a Flight-Plus because holiday components must be requested within a day of each other to constitute a Flight-Plus.

Flight-Plus - Mr Randall requests and buys a Eurostar train ticket to Paris and an inbound flight to the UK, with Paris accommodation and car hire over the telephone with a travel business.

Not a Flight-Plus - Mr Randall books a flight from Paris to Brazil, an inbound flight to the UK and accommodation in Brazil. This is not a Flight-Plus because the booking must include travel departing the UK in order to constitute a Flight-Plus.

So how should I go about booking my holiday - what is the advice now?

The advice remains as ever;

• Wherever possible book an ATOL or a Flight-Plus covered holiday. If in doubt ask the company you are booking with if they are covered and if in doubt that the licence is genuine then check the licence with the CAA. However it must be your arrangements that are covered by the licence, NOT that the seller actually holds a licence.  From 1st October you must be provided with an ATOL certificate to demonstrate the cover that applies to your booking. Until then there exists the possibility for confusion as to what protection is in place.
• Pay by VISA or Mastercard debit card for charge back protection or by credit card you can receive protection under the Consumer Credit Directive for transactions over £100.
• For all holidays without protection you should have an insurance policy to cover End Supplier failure. This protects you against loss due to the collapse of a part of your holiday or the ability to re-book the failed element without incurring the additional costs, dependent on your policy.

Additional Points

The original review and consultations started as far back as 2009 when the Regulating Air Transport consultation began. On the 3rd February 2011 a full scale review of the existing cover and recommendations for revisions was launched by Theresa Villiers the then Minister for Aviation.

The original intention was for the reforms to be in place by the end of 2011 ready for the key 2012 early booking market of January. This was then pushed back to the end of April to allow the trade to apply for licences, tidy up agreements and get their back office systems in order. The certificate part was delayed to 1st October as the implementation of the standard certificate requires longer to integrate.

The final arrangements for the reforms were only published by the CAA on the 4th April, 26 days ahead of when they come into effect, not giving the trade enough time to be ready.

The CAA will not be launching a consumer awareness campaign until the certificates go live later this year in order to fully inform consumers ahead of next January's booking season.

The Government has announced that it intends to review cover for flight only as part of the forthcoming Civil Aviation Bill as new legislation is required to extend ATOL style protection to airlines.

ATOL covered holidays were around the 29 million mark a year at their peak in 2001. In 2010 this had dropped to 20 million. In 1997, 97 per cent of flights for leisure purposes were covered by ATOL. In 2009 this had fallen to 50 per cent of flights being covered due to the arrival of low cost carriers. (Information sourced from the Department of Transport).

It is believed that between five and 10 million additional holidays a year will now be covered by the introduction of Flight-Plus. As yet, until licences have been issued we will not know the true figure being covered by Flight-Plus or new standard ATOL licences.

-Ends-

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