Special Report: CAA responds to industry issues with new Atol rules

Special Report: CAA responds to industry issues with new Atol rules

The UK regulator’s amended Atol Regulations go part way to addressing industry concerns ahead of new rules being enforced from July. Ian Taylor reports

Abta will raise several “issues” with the Department for Transport and CAA over the amended Atol Regulations released last Friday.

The regulations come into force from July alongside new Package Travel Regulations.

The CAA has taken industry concerns into account in finalising the regulations following a consultation with the sector in February and March. Abta challenged several proposals at the time and queried others saying they went “beyond what is required by the [European] Package Travel Directive” (Travel Weekly, March 29).

In its consultation response, published alongside the amended Atol Regulations, the CAA has acknowledged “industry concern over the time and resources required to comply” with the changes and highlighted three ways in which it has adapted the requirements “to make compliance more achievable”.

First, it has deferred until next year implementation of some measures not required to comply with the Package Travel Directive; for example, information disclosed to consumers during the sales process and “as they search for holidays”.

Second, the CAA has deferred a proposal that Atol-holders that advertise a specific flight must secure the flight straight away. Instead, the CAA says it will “work with key stakeholders to develop the precise wording of the obligation” for introduction next April.

The CAA has also confirmed it will allow a three-month grace period, to October, for businesses to comply with the amended Atol rules, during which “our enforcement stance will focus mainly on monitoring”. This won’t alter the fact that businesses acting as travel organisers will be liable to consumers under the Package Travel Regulations from July 1. The documents clarify several other issues – in particular, Atol Certificates.

The CAA proposed in February that “an agent must ensure consumers are supplied with an Atol Certificate”. This was interpreted by some in the sector to mean agents were to produce Atol Certificates for consumers in every case.

The CAA has clarified this, saying: “Production of an Atol Certificate can be done by either the Atol-holder or its agent. Who produced [it] should be agreed between an Atol-holder and its agent.”

The authority has decided to retain three types of Atol Certificate – for a ‘single contract package’, a ‘multiple contract package’ and ‘flightonly’ – despite fears this will confuse consumers. Travlaw senior partner Stephen Mason pointed out last month: “The point of the Atol Certificate is to tell the consumer whether they bought a package. Why do we need a middle category? The idea is to make it clearer, this makes it complicated.”

The CAA says it has retained the middle category to “retain the form of the Flight-Plus Atol Certificate and relabel this ‘multi-contract package’”, saying this will “enable businesses to transition from Flight-Plus to packages with minimal business systems changes”.

CAA to impose quarterly Atol reporting on SBAs

The CAA will proceed with plans to make Small Business Atol-holders (SBAs) report Atol returns quarterly rather than annually from July despite opposition from Abta.

The changed requirement is included in the amended Atol Regulations and accompanying CAA consultation response published at the end of last week.

SBAs are licensed to sell no more than 500 protected holidays a year. Abta director of legal services Simon Bunce warned in March: “The SBA holder is going to have to change what they do and now is not the time.”

The CAA will also proceed with imposing a three-month deadline on Atol-holders to implement any future changes to the terms of agency agreements.

However, the CAA has dropped a proposal to qualify the Atol exemption for corporate travel by adding “requirements for the contents of agreements” between business travel firms and their clients. The authority said: “We have decided to publish no requirements in this regard but would expect to review the situation.”

The regulator has also put on hold a proposal to introduce online Atol Certificates while a feasibility study is concluded and promises a decision on whether to proceed “during 2018-19”.

The CAA confirmed that the 50% rebate credits on the £2.50 Atol Protection Contributions (APCs) on certain (agentfor- consumer) bookings will cease. The rebates amounted to £3.3 million of the £62.3 million in APCs collected in the 12 months to March 2017.

The CAA noted: “The purpose of the [rebate] policy was to incentivise businesses to sell protected products rather than unprotected [and] the rationale for those incentives has ended” as the bookings will be “unambiguously licensable in future”.

Seat-only sales protection tipped to cause confusion

Protection of seat-only sales appears set to remain the subject of confusion among consumers and controversy in the sector.

Abta warned in the consultation that including the flight element of the new category of Linked Travel Arrangements (LTAs) within Atol would “exacerbate” confusion because LTAs – which are primarily designed to cover ‘clickthrough’ sales between websites – will offer only partial financial protection and not through Atol.

But the CAA has opted to proceed by adding a warning to consumers on Flight-only Atol Certificates that if they have booked a Linked Travel Arrangement which includes an Atol-protected flight, the protection applies only to the flight and not to other components of the LTA.

The CAA notes that where an Atol-protected seat-only booking forms part of another Atol-holder’s package, the Air Travel Trust (ATT) – which holds the money for repatriation and refunds under the Atol scheme – will continue to require the package organiser to replace the flight.

It also notes: “The ATT will continue to offer repatriation protection for all seat-only sales, to enable the CAA to mount effective rescue operations.”

MoreAbta welcomes CAA’s amended Atol regulations

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