Government plans to give tourists peace of mind if their travel provider goes bust came into force yesterday, but the scheme will not increase the number of people protected against financial disaster.
Provided their operator is registered with Air Travel Organisers’ Licensing (ATOL), Manchester holidaymakers will now be issued with a standard ATOL certificate, which plainly states the person’s level of protection, eradicating any doubts.
The move is a response to thousands of British tourists being left out-of-pocket by a string of tour operators recently going into liquidation, the most high profile being XL Leisure’s collapse in September 2008.
But ATOL admit the proportion of British holidaymakers leaving the country protected will not be radically altered by the scheme.
This is chiefly because so many holidays are now booked online, with flights and accommodation reserved separately. Customers that book directly with airlines and hotels are rarely covered by ATOL.
Aviation Minister Simon Burns agreed that internet bookings had led to a lack of clarity about whether customers were covered and he is convinced the new scheme will help.
He said: “Whether on a computer, the phone or in a travel agent’s, holidaymakers will not only complete their booking but also receive a certificate removing any doubt over their level of cover.
“The ATOL certificate will give peace of mind to millions when booking their holiday.”
Thousands of passengers were turned away from Manchester Airport when XL folded, with a further 500 passengers grounded at the airport after Goldtrail went into administration in 2010.
Some of those affected were at least partially recompensed by being ATOL-protected, but many Manchester holidaymakers faced months anxiously waiting, unsure whether they were entitled to their money back.
It was a similar situation when Allbury Travel Group – who operated under the name Libra Holidays – ceased trading in December 2009.
One customer wrote on a forum: “I’ve been on to the CAA, their call centre staff are a complete waste of time, they know nothing!! They are trying to say that, as the confirmation email I received from Libra Holidays doesn’t mention ATOL, we’re not covered!
“That just seems ridiculous to me as I booked the flights with Libra, who ‘were’ ATOL protected.”
The new measures should ensure such frustrations are averted – with those affected either getting a full refund or being repatriated if they are already abroad – but the cover will only be useful if ATOL are able to quickly process claims.
After XL’s 2008 collapse, 10,000 British tourists were still waiting for their money back 12 months on.
Debbie Edwards, whose £552 flight from Manchester to Gran Canaria was cancelled, revealed that at the time that multiple emails, faxes and letters had not been enough to persuade ATOL to refund her booking.
Such worries are small compared to those were not ATOL-protected and therefore lost all their money after booking online.
Another forum contributor, Emma, experienced this pain and posted: “Wish we’d gone through the hassle of changing [from XL to another provider] now! Words cannot describe how we’re feeling having lost £543 on flights. Gutted!!”
The new certificate will not, however, substantially reduce the number of people in Emma’s situation, ATOL told MM.
Only 50% of holidays undertaken by Brits each year are ATOL-protected, amounting to about 19million.
A spokesman for ATOL said: “The certificate is unlikely to radically change that number although our consumer research has indicated people are more likely to book a protected holiday if they get a certificate confirming that.”
There had been fears that issuing a standard certificate would increase the charge ATOL levy on holidaymakers when they book, which is currently only £2.50.
The government had suggested the charge would be reduced to £1.50, but ATOL claim they will not review the figure until their debts are cleared.
The trust that funds ATOL is currently £18million in deficit and, unless that figure returns to surplus, any reductions will not be considered, although ATOL have ruled out the price being increased.
Dame Deirdre Hutton, Chair of the Civil Aviation Authority, agrees that the most recent changes will alter people’s perceptions, rather than figures.
“It’s a change in the scheme that will make simple what currently can seem very complex: with the certificate consumers have protection, without it they do not,” said Dame Hutton.
What ATOL claim will make a difference are reforms the government introduced in April this year, which stipulate that people booking flights with accommodation or car hire have to be ATOL-protected.
This should stem the flow of people inadvertently moving away from booking holidays that are protected.
ATOL are also concerned that people adopt the attitude that protection is not necessary because their travel insurance will cover them in the event of their provider folding.
In most cases this is not the case. Unless the travel insurance policy specifically contains Scheduled Airline Failure Insurance (SAFI), holidaymakers will not be covered if their provider fails.
If a natural phenomenon prevents travel – like the Ash Cloud that spread from an Icelandic volcano in April 2010 which froze European airspace, leaving 150,000 Brits stranded overseas – the airline involved will normally compensate passengers although special insurance agreements have subsequently been offered that cover these circumstances.
Critics maintain that Mr Burns’ announcement will still leave complications with ATOL-protection, despite providing extra clarity, with airlines having multiple loopholes in the regulations to avoid the rules.
New Transport Secretary, Patrick McLoughlin, will hope the Civil Aviation Bill, currently going through Parliament, is passed.
Given it proposes all holidays sold by airlines become ATOL-protected, the policy might actually cut the number of Brits travelling abroad vulnerable to being left penniless.