The CAA confirmed today it would review the Atol Regulations and license holders’ “financial structures” in light of the Covid crisis “over time”.

But CAA group director of consumer markets Paul Smith insisted the framework for the September Atol-renewal process due to be completed next week was unchanged.

Speaking at an Abta Travel Law Seminar, Smith said the ability of businesses “to pay refunds more quickly” was an area “to think more about”.

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He said: “Over time, we will look to apply the lessons of this [the Covid crisis] and of Thomas Cook.”

The Sunday Telegraph reported at the weekend that “the travel industry is in line for its biggest shake-up in half a century” as “watchdogs prepare sweeping changes to reflect public anger over delayed refunds”.

The Telegraph suggested: “Travel operators will be forced to ring fence customer deposits” with “changes implemented over the next few weeks.”

However, senior industry sources dismissed this, telling Travel Weekly: “All sorts of things need to be looked at post-crisis, but nobody thinks it would be sensible to do it now. It would remove what little liquidity there is in the system and make things worse.”

A second source suggested the CAA would “hint” that it’s considering reform this week, but made clear: “This is in the ‘baby steps’ stage.

“Nothing will happen until next year at the earliest and then it would involve a consultation.”

Smith confirmed that approach. He told the Abta seminar: “The CAA very much understands the massive challenges facing the travel industry, which unfortunately look likely to continue.

“From the start, we supported refunds to consumers while recognising refund credit notes and vouchers under EU Regulation 261 [on air passenger rights] are alternatives so long as consumers are made aware of their rights.

“We recognise the timescale [in paying refunds] was a challenge because of the scale [of the crisis] and the social distancing requirements for package operators and airlines, and clearly there has been an ongoing challenge over the interplay between the Package Travel Regulations and Regulation 261.

“[But] an area to think more about is where businesses have been able to pay refunds more quickly, possibly reflecting their business model, and for us to think about the financial structures and approaches we take over time.”

He insisted: “This is not an immediate thing. We continue to apply the framework we always have to Atol renewal. But over time we will look to apply the lessons of this and of Thomas Cook.”

The CAA review is expected to consider the extension of trust arrangements to ring-fence customer payments.

Smith ruled out a return of ‘Flight-Plus’ Atol arrangements, saying: “Experience tells us customers do not grasp the complexities of different protections.

“We don’t think it [Flight-Plus] particularly clear for consumers. We aim on keeping things simple.”

Flight-Plus Atol arrangements ended when the 2018 Package Travel Regulations came into force.

Smith outlined the CAA’s efforts to speed up airline refunds and said: “The work we have done has seen a much broader range of airlines paying refunds. I’m not saying it’s perfect or that there is not scope for further improvements.

“We are clear our enforcement powers [on airline refunds] are insufficient. We have an existing [enforcement] case with an airline from 2018 which has still not yet come to court.

“A better toolkit would help us. We’ve made representations to Parliament about that.”

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