By Mark Tanzer, chief executive of Abta
Plans to extend the Atol scheme beyond the traditional package holiday have been broadly supported. But some have argued for the scheme’s abolition, saying customers should find some other form of insurance if they want protection or take the risk. After all, we don’t force people to take out protection when they buy other products, so why holidays?
There are a number of reasons, I think. First, the annual holiday is just that – annual. It’s not something we buy every week and for many it’s a significant outlay. When you leave the shop or the website what do you have? A promise of a break for you and your family sometime in the future, and unexpected things can happen between the time you buy and the time you travel.
Also, a holiday is unusual as a purchase. It relies on several different elements working together and any failure along the line has the potential to wreck it. To have a flight and no hotel is not great - to have a hotel and no flight is worse. And while on the subject of failure, if it does go wrong you could be many miles from home, which can make getting home a challenge. At that point a failure becomes a problem not just for the customer and the industry, but for the government.
All these reasons seem to me to make the case for an efficient and clear system of protection for holidays. We want customers to be confident to book and confident to travel.
The Atol scheme has historically applied only to package holidays. As we know, a very large number of holidaymakers now buy holidays which are not sold as packages but put together by agents using separate transport and accommodation components.
However, customers have exactly the same expectations and run exactly the same risks. That is why Abta supports extending protection to these holidaymakers. Yet even with this, there will still be a gaping hole in protection involving holiday sales by airlines where customers click through to an accommodation provider.
Until the government closes this loophole not only will existing airline holiday customers be unprotected, but also more people will be driven towards booking airline holidays because these will have no costs of protection – the opposite effect of what the government is trying to achieve.
If we agree financial protection is a good thing for the customer and the industry, we must recognise it is possible only if every company selling similar products is treated in the same way.
If one sector has a permanent cost advantage because it doesn’t have to provide protection, the pressure of competition will break the Atol scheme apart as travel organisers choose between protection and survival.
That is why this week’s expected announcement is important as a first step, but must be followed by bringing airline-holiday sales into the Atol scheme at the first opportunity.
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