The UK government is to offer greater financial protection for millions more package holidaymakers under the Air Travel Operators’ Licence (ATOL) scheme.

Many holidays involving flights are covered against airline or tour operator collapses by the ATOL scheme, which is run by the Civil Aviation Authority (CAA).

However new government plans are now to include air travel trips that were not previously Atol-protected.

Aviation Minister Theresa Villiers said the proposals would cover up to six million extra holidays would be covered by Atol.

She said: “As we move into the busy summer period, millions of us will be heading abroad on holiday. While the chances of a holiday company going under are thankfully very low, the impact on those affected can be significant.

“Recent years have highlighted not only how important financial protection is to holidaymakers, but also the fact that the ATOL scheme is in urgent need of reform.”

“We have always been clear about our commitment to modernising the ATOL scheme, and these proposals are an important step towards achieving just that. As well as ensuring up to six million additional holidays are protected, these proposals will help steer the scheme’s finances on to a more sustainable path for the future.

“We are also making an important step forward on the debate on delivering a wider reform of ATOL in the future.”

CAA chairman Dame Deirdre Hutton welcomed the proposals “because they will bring clarity for consumers and put an end to the situation where people are left unsure to what extent their holidays are protected if their company fails”.

She went on: “Today’s announcement will empower consumers to make informed choices about their air holidays.

“This is the first step in the reform of consumer financial protection and the CAA will be consulting on further proposals on the funding of protection in the autumn.”