The whole package

Richard_Rosser_2016.jpgRichard Rosser on the Air Travel Organisers’ Licensing Bill, which begins Lords Committee stage today

Businesses selling air holiday packages in the UK are required by law to hold an Air Travel Organisers Licence (ATOL). If an ATOL licensed firm becomes insolvent, the Civil Aviation Authority can refund protected customers or – if they’re already on holiday – ensure they’re brought home safely. The scheme is funded by contributions made by travel companies into the Air Travel Trust Fund.

In 2015, the EU adopted a revised Directive on package travel and linked travel arrangements which will apply from next July, and which member states have until January to implement. The UK government supported the updating of the Directive as it is consistent with our own ATOL protections and should provide a consistent approach to protection, including holidays booked online.

The revised Directive takes account of the major changes that have occurred over the last two decades or so in how holidays are bought and sold with the growth of the internet and mobile phone technology. The internet in particular has enabled people to mix and match the components of their holiday in a way that often falls outside the scope of ATOL and current rules.

The revised Directive and the current ATOL Bill going through the House of Lords extend the scope of protection to a new concept of linked travel arrangements. This is designed to provide protection for consumers making less formal holiday arrangements, for example with a flight from one trader and the booking of a hotel through another, than the more traditional package deal.

Labour has an amendment down for today’s first day of Committee (taking place in the Grand Committee room) to pursue two concerns. First, the level of protection given by EU based companies selling in the UK. Second, the costs of pursuing a claim if a business established elsewhere within the EU becomes insolvent.

The reason for this becoming a potential issue is that the revised Directive and the Bill provide for EU based companies in future to comply with ATOL or ATOL equivalent insolvency protections applicable in the member state where that business is based rather than comply with those in the country of sale. If consumers in Britain purchase a trip from a business established elsewhere in the EU and the company becomes insolvent, there could well be some costs to the consumer here associated with different procedures, processes and time spans. For example, in processing a claim with a non-UK insolvency protector.

We also have concerns about an apparent dormant power in the Bill which would enable ministers to make future changes to ATOL and the Air Travel Trust Fund without effective scrutiny.

A further issue will come on the back of the demise of Monarch Airlines. Most of its passengers were flying as normal air travellers and not as part of a package arrangement. So, only some 10% to 15% of them are expected to be covered by the existing ATOL arrangements – a figure unlikely to have been much higher even under the extended protections provided by the revised Directive and the Bill.

Lord Richard Rosser is Shadow Transport Minister in the House of Lords

Published 11th October 2017

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