Aviation minister Theresa Villiers has outlined a series of reforms to Air Travel Organisers’ Licensing aimed at offering protection to six million more passengers.

Key to the proposals is the extension of the scheme to cover flight plus holidays, where passengers book a flight and various other elements of a holiday within a specified short period.

This will expand the existing legal definition of a package holiday, offering protection to a greater number of consumers in the event of an airline failure.

Ms Villiers explained: “Since it was introduced, ATOL has provided protection for millions of holiday makers and I am determined to see this continue.

“Insolvencies in recent years have shown us how important it is that customers are able to buy protected holidays, but recent court cases have only served to highlight the fact that the scheme is in need of reform.

“These changes will remove much of the confusion surrounding ATOL, while ensuring operators who offer such holidays provide customers with the financial protection they expect.”

ATOL Reform

Under the new rules businesses will also be deterred from misleading consumers about their level of protection.

Some companies presently offer holidays which might look like packages but make the transaction as an agent for the customer without explaining to the customer that this means forfeiting ATOL protection.

The proposals are designed to provide customers with a clear and honest explanation so they can make informed decisions.

Cost is the key motivation behind the changes, with the government keen to reduce the deficit in the fund which covers refunds and repatriation in the event of operator insolvency.

Following a number of high-profile collapses in recent years, the Air Travel Trust Fund (ATTF) relies on a government guarantee, currently worth £42m, and ministers see the reduction of this as very important.

“As well as improving protection for passengers, these reforms will help us put ATTF finances back on track so that taxpayers’ exposure to the fund’s deficit is rapidly reduced and ultimately eliminated,” continued Ms Villiers.

“I also believe there may be a case for new primary legislation to address other issues in the ATOL scheme and I will be considering this further in the course of the year.”

Industry Response

AITO chairman, Derek Moore, welcomed the changes but warned further consultation was necessary.

“There is obviously a lot of detail, and the devil is in the detail, but our initial thoughts are that we find the proposal very encouraging and it should help to level the playing field, bring credibility back to the ATOL system and it is good news for consumer.

“As AITO already believes in fully protecting any services our members, the CAA’s thinking is moving in our direction but is less welcome news to those who have misrepresented their intentions in the past,” he concluded.