The Civil Aviation Authority has confirmed it intends to raise the levy on holiday protection by £1 per booking from April 2010.
The rise in the ATOL Protection Contribution (APC) follows the collapse of XL Leisure, the UK’s third largest travel group, along with a growth in the number of ATOL-backed companies that have ceased trading. CAA consumer protection group deputy director David Moesli said: “There will be a consultation on the level of the APC sooner rather than later.”
He said: “The trade has to be realistic. Just look at the problems on the high street.”
The increase has drawn criticism from both industries bodies and the private sector, including ABTA and the Federation of Tour Operators, along with TUI and Thomas Cook.
The APC was introduced in April 2008. At the time, the CAA pledged the rate was unlikely to rise for three years.
However there is relief that the rise is only £1 rise as it was feared it have increased by as much as £5.
The rate will be ultimately decided by secretary of state for transport Geoff Hoon, although the CAA is legally bound to consult the industry before any changes in the levy.
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