Air Travel Trust’s £100m ‘too little to cover a big failure’

Air Travel Trust’s £100m ‘too little to cover a big failure’

The fund that backs the Atol financial protection scheme has topped the £100 million surplus mark, but is still not enough, according to industry experts.

The Air Travel Trust (ATT) reported the fund sat at a record £93.7 million on March 31. The CAA said it was now more than £100 million.

The ATT was £32 million in debt in 2010 after the £1 Atol Protection Contribution (APC) was raised to £2.50, but returned to surplus for the first time in 17 years in 2013.

This led to calls for APC to be reduced, but one leading industry body branded this dangerous and will propose a new scheme to raise cover to £350 million.

Alan Bowen (pictured), legal adviser to the Association of Atol Companies, said now the EU Package Travel Directive was agreed, a new solution should be considered.

“Cutting the £2.50 is an option but it is dangerous, as the fund would have less income,” he said.

“We are working with major insurance brokers on our own scheme that would cost £2.50 or less.”

Chris Photi, head of travel and leisure at White Hart Associates, said he expected APC for Flight-Plus packages for all firms operating trusts to be cut to £1.25.

But he said the levy would remain because the ATT surplus did not cover the risk of failure of the largest operators.

He repeated warnings the ATT could come to be regarded as a revenue-raising opportunity by the government after APC was deemed a tax in May 2013.

Andrew Burnham, of accountants MacIntyre Hudson, said it was reasonable for the industry to demand APC be reviewed once the ATT reached a “reasonable level”.

“I would suggest that we have reached that level,” he said.

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