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Tuesday, September 28, 2021

CAA must move cautiously on proposed ATOL changes

Published on Tuesday, September 14, 2021

Proposed changes to ATOL being considered by the Civil Aviation Authority (CAA) should be phased in gradually, says Jonathan Wall, CEO of business advisory and accountancy group Elman Wall.

This will prevent a potentially drastic impact on smaller, otherwise healthy tour operators.

Wall says there is merit in proposals to mandate the segregation of customer monies to provide greater consumer protection but warns that without an appropriate time period for Covid-ravaged travel businesses to recover, a large number of well-managed, healthy tour operators could risk going under.

The CAA has been consulting over recent months on its intention to introduce changes to ATOL. 

The main changes relate to how ATOL holders fund their operations.

Elman Wall currently acts as ATOL Reporting Accountants to over 100 ATOL holders.

Wall believes that the CAA should be cautious about making wholesale changes to a system that works well on the whole, on the back of a small number of high-profile failures.

“Between 2014 and 2019, 93% of customers affected by failures of travel businesses were due to Monarch and Thomas Cook – both companies that arguably should not have had ATOL licences renewed for some years prior to their failure,” Wall said.

I would urge the CAA to be cautious about making too many substantive changes to a system that largely functions effectively, as a result of the mismanagement of two giants who bear no resemblance to most licence holders.”

In a submission to the CAA consultation, he outlined a number of key arguments that includes aligning rules for airlines and tour operators.

The duties and obligations of tour operators and airlines to their customers should be consistent.

Mr Wall added: “It is difficult to comprehend that there is consumer protection in place for the sale of holidays, but not for the direct sale of airline seats.”

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