XL collapse forces rise in ATOL levy

XL collapse forces rise in ATOL levy

The ATOL levy on package holidays is to rise from October to make up the shortfall created by the collapse of XL Leisure.

The Air Travel Trust Fund said it had to pay out nearly £29m to repatriate customers left stranded when XL went bankrupt last September, as well as refund those who had made bookings but did not travel.

The bankruptcy pushed the fund to a deficit of £46.5m. It now needs to be replenished. Its £1 levy on package holidaymakers will rise to £2.50 from October 1.

The levy is paid only on those holidays covered by the ATOL scheme, which is administered by the Civil Aviation Authority. Holidays with flights as part of a package are usually covered by the scheme, as well as some flights sold by travel agents. However it does not cover flights bought directly from airlines.

The Atol scheme was funded by performance bonds posted by tour operators and travel agents. But that system was abandoned last year and replaced with the levy in April.

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Roger Mountford, the fund’s chairman, said: “The decision has enabled the trust to be placed on a more solid financial basis during a period of trading uncertainty.”