On the eve of publication of the Department for Transport’s Atol reform consultation, here are ten things we know about the reform - in the words of CAA consumer protection group director Richard Jackson:
1) Aims of reform: “The government has made clear it wants consumer clarity and the deficit in the Air Travel Trust fund, backed by government guarantee, paid off. It’s a priority to pay this off as quickly as possible without raising the Atol Protection Contribution.”
2) Airlines [and bringing them into Atol protection]: “This government is willing to reach a view on the inclusion of airlines, with the possibility of doing so in the near term. It has given no commitment – it never would – but it’s the best opportunity the trade has had. . . We recommended all flights [be covered] in 2005. Alistair Darling [then transport secretary] turned down the recommendation.”
3) Agent for the customer: “Acting as an agent for the consumer is a legitimate business model. It’s perfectly legal. But we believe it is tougher than some people think. The CAA would direct companies trading in this way to the consumer regulations. We will be issuing Atol Certificates and companies trading in this way would need to inform consumers they were not getting protection. There could be economic incentives for people to obtain licences.”
4) Atol to Atol [in the event of a supplier failure]: “At the moment travel retailers are absolved from any responsibility for the quality of the holiday product they sell. The government has formed the opinion that it is not unreasonable for agents to take responsibility for their suppliers.”
5) ’Fig-leaf’ Atols: “We believe most people will get an Atol. How much flight-plus they put under it is another matter. If a company wants an Atol to give assurance [to customers], this would need to be part of the standard terms – it would have to be clear. ‘Fig leaf’ Atols are a problem at the moment.”
6) Delay in consultation: “The delay is beyond our control. We are not the government. But it’s not a delay from the government’s point of view. The government has a complicated process for regulation. What comes out of this will have strong political backing.”
7) Impact on business: “It would not be sensible for the government to set up regulations that kill businesses which could pay off the [fund] overdraft. We have no intention of putting people out of business. We want a competitive industry. We want new entrants. . . There may be people who do not have sufficient credit worthiness to get an Atol, but that is true now.”
8) Loopholes: “Regulation will always lag behind the industry. People who dream up brilliant businesses will be able to find ways around regulations. In trying to close loopholes we want to make sure we don’t stop businesses being profitable while we protect consumers.”
9) Number of flight-plus bookings: “The number will be between two million and six million a year. The figures came from the trade. But no one knows. We have to see how the regulations work, what the economy does. Other numbers in the consultation will be more precise.” [The DfT consultation is likely to say six million.]
10) Process of reform: “Towards the end of the year we will consult on new ways to fund protection once the overdraft is paid off. The criticism that the consumer is over-protected – by Atol, by insurance, by credit-card providers – is valid. It would be perfectly reasonable to have different organisations with different products to achieve a consumer-protection kitemark. It would not necessarily have to be an Atol.”
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