News

ABTA could soon be allowed to issue ATOL licences under Civil Aviation Authority plans to close the loophole that allows agents to use split contracts.

The authority has proposed a scheme where small agents bypass the CAA and have their financial position and management assessed by Newman Street to obtain an ATOL licence.

The CAA wants all agents selling individual holiday elements as a package under separate contracts to hold an ATOL licence but is concerned at the bureaucracy of administering the extra 650 companies it estimates are issuing dual contracts.

In the last year alone, 7,000 people were rescued and 13,000 refunded, at a cost of £3.7 million to the Air Travel Trust.

CAA director of consumer protection Helen Simpson said: “It is important the public sees the ATOL symbol and knows they are protected, it doesn’t matter who handles the administration.”

The CAA argued that, as most smaller travel agents already hold licensing protection agreements and bonding arrangements with trade bodies, it would be sensible to incorporate ATOL protection.

ABTA legal advisor Simon Bunce welcomed the proposal, but said the issue of whether selling a flight and accommodation constitutes a package under the Package Travel Regulations should be addressed.

He said: “It is a sensible way of doing it and should reduce the amount of bureaucracy small agents face.” 

ABTA is concerned about the increasing number of agents offering split contract deals going bust and estimates the number of recent failures has cost it more than £1 million. 

The industry body called in the police after it alleged two Blackpool agencies had been making split contract packages but failing to secure accommodation (Travel Weekly August 26). The consultation is open until November 23, and the CAA is hoping to introduce any new regulations by April 2003.