The Air Travel Insolvency Protection Advisory Committee has welcomed the government's proposals to reform the Atol scheme but warned they do not go far enough.
In its annual report, the commitee said it was strongly in favour of plans to license sales of a flight sold with another element as it will "alleviate the confusion experienced by many consumers as to whether their travel arrangements are financially protected or not".
However, it said the changes do not go far enough because they do not bring in all airline holiday sales to the Atol scheme.
"We accept this is a matter for primary legislation and it is hoped that the initial step of Atol reform will encourage the government to include all air holidays, including bookings made with scheduled airlines, within a system of financial protection."
The committee predicted that trading will remain difficult during 2011-12 and there will be no recovery until 2012-13 at the earliest.
"The travel industry remains unstable, with consumers nervous when faced with the possibility of cancellations due to geo-political forces and natural disasters."
The report confirmed that there were 29 failures in the year to March 2011, with a total cost to the CAA of £48.2 million.
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