Breaking Travel News

ABTA reveals details of ABTA-ATOL scheme

ABTA reveals details of ABTA-ATOL scheme

ABTA – The Travel Association today revealed details of the combined bonding facility it will be able to offer Members as part of the ABTA-ATOL Joint Administration Scheme (ABTA-ATOL JAS).  The CAA will require new ATOL holders to have bonding arrangements in place in relation to their ATOL activity.  The facility will give retail travel agents the choice to meet their total bonding requirements, through the mechanism of a combined retail and principal Bond, held by ABTA.

The facility will in most cases provide Members with an option to decrease the total bonding requirement by reducing the value of the additional bond required. Under the new ATOL regulations, the first year bond requirement of the CAA is the greater of £40,000 or 15% of the turnover to be protected under the ATOL. For qualifying Members, the facility will reduce the Bond required to a minimum of 8% of ATOL turnover and replace the difference with an ATOL Bond Replacement Scheme (ABRS) Insurance premium, paid to the ABTA Insurance PCC Limited.

In addition to saving costs by reducing the Bond required, the facility will also save administration time as Members will not have to apply for a separate CAA bond. Additionally, no separate security or personal guarantees will be required by ABTA Insurance PCC Limited.

John de Vial, Head of Financial Protection, ABTA said: “This scheme provides our Members with greater flexibility and a choice as to how they secure the most cost-effective bonding arrangements. It will ease the administrative burden of ATOL compliance for participating businesses and, for many give the opportunity of reducing the overall bonding costs.”

As an example, the normal minimum ABTA retail bond requirement is £25,000 and the minimum CAA ATOL bond requirement is £40,000, resulting in a total bond requirement of £65,000. ABTA plans to offer qualifying Members a choice of either:


• providing a new, combined bond, for the £65,000, or
• a reduced combined bond of £40,000, plus an insurance premium for entry to the ATOL Bond Replacement Scheme (ABRS) in respect of the £25,000 reduction in bond required. The premium will be quoted by the ABTA Insurance PCC Limited following review of the Member’s ABTA-ATOL application and financials.

The CAA reserve the right to require bonds in excess of 15%, for example, in the case of unusual business patterns. The financial security required by the CAA for the ATOL scheme is normally reduced annually on renewal, so that it is removed after four years, subject to CAA approval.

The ABTA-ATOL JAS provides Members with a simple and cost-effective process to comply with the new ATOL regulations. The scheme enables Members to apply for an ATOL licence through ABTA with lower fees. It is ideal for smaller and medium-sized travel businesses and any ABTA Member with an ATOL turnover of less than £1.5m will be eligible to apply.

All ABTA Members will shortly receive an application pack for the Scheme and those interested are encouraged to sign up as soon as possible in order to meet the challenging CAA deadlines for compliance.