Analysis: Your nine-point guide to Flight-Plus Atols

Analysis: Your nine-point guide to Flight-Plus Atols

Q. Who needs a Flight-Plus Atol?

A. Anyone selling a flight out of the UK and accommodation or car hire “in connection” with the flight. The DfT believes this will affect 600 Abta members who do not currently hold an Atol and many companies that do.

However, the government caused uncertainty by announcing a three-year moratorium (to April 2014) on regulations affecting ‘micro businesses’ employing fewer than 10 staff. The CAA says between 400 and 550 of the 600 firms likely to need a Flight-Plus licence are in this category, and up to 700 existing Atol holders.

A decision on whether the moratorium applies to firms requiring Atols is due in October.

Q. What is the definition of Flight-Plus?

A. The sale of a flight and accommodation or car hire – bought the same day, the day before or day after – will comprise a Flight-Plus holiday. The definition will depend on what a consumer requests, “not how a business responds to that request”.

A business making such a sale will be defined as a Flight-Plus Arranger. An agency consortium may act as an Approved Body (certified by the CAA) and hold an Atol on behalf of members, removing the need for individual businesses to have Flight-Plus Atols.

Q. Who is liable when a suppler fails?

A. A Flight–Plus Arranger will be liable for the cost of protecting consumers if a supplier fails – replacing lost holiday elements, arranging repatriation where necessary and paying refunds. The liability applies solely to insolvency.

Flight-Plus sellers are expected to buy supplier failure insurance to cover this.

Q. The DfT says I’ll need an Agency Agreement. What’s that?

A. Anyone selling flights through an agent “must have a written agreement with the agent” authorising the sale of flights by them. Some companies already insist on such agreements, others do not.

Q. Do I need to issue Atol Certificates?

A. Agents will be required to issue an Atol Certificate to everyone buying a protected holiday, issued “on receipt of any payment” – meaning when a customer pays a deposit, not the balance. This will confirm the name of the Atol holder and the Atol cover in place.

Q. Will I be liable for VAT?

A. The DfT believes Flight-Plus agents will not be liable for VAT under the Tour Operators’ Margin Scheme (Toms) as long as they genuinely act as agents.

The consultation refers to “the general view” of Revenue & Customs (HMRC) that “the Flight-Plus proposals on their own are unlikely to change whether a travel business is subject to Toms.”

Q. What if I am acting as ‘agent for the customer’?

A. The DfT accepts some businesses will act as “agent for the customer” to avoid the regulations, although it suggests this may cause “considerable detriment” for customers and warns it may change the law to regulate such transactions.

In the meantime, it says businesses “need to make customers aware…they will not receive statutory financial protection” or risk prosecution under Criminal Protection from Unfair Trading Regulations.

Lawyers suggest this will be difficult to enforce. The CAA insists: “We have powers to enforce and intend to enforce.”

Q. What are the costs of compliance?

A. The DfT estimates the costs to businesses of Flight-Plus at “about £3 per booking” and suggests “businesses will be able to pass on a significant share” of this to consumers.

It puts the costs for “large to medium businesses” at 1.6%-1.8% of annual turnover in the first year, falling to 1%-1.1% after four years. Smaller businesses “face slightly higher costs,” says the DfT, but the costs to those in consortia “will be lower”.

Q. What happens next?

A. The consultation ends on September 15, with the DfT to announce its decisions in “late autumn” – probably October – and Flight-Plus to come into force on January 1, 2012.

The DfT insists Flight-Plus is a first step to a wider review of the Atol scheme.


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