ATOL Reforms: More British holidaymakers to pay for extra travel protection

Widening ATOL's scheme means a new tax, but more peace-of-mind for travellers.

atol trust fund

Millions more British holiday-makers will have to pay into the Air Travel Organisers’ Licensing (ATOL) insurance scheme, but will be better protected against airline and tour operator collapses under reforms proposed by the coalition government.

Many holidaymakers are currently not covered by the current ATOL scheme, which only protects people buying package holidays from losing money if their charter airline, or tour operator collapses.

Under the government’s plans, the insurance scheme will extend the £2.50 per person ATOL Protection Contribution, which is added into the price of a package holiday, to people who book flights, accommodation and other components such as car hire within a short, specified period.

Aviation minister Theresa Villiers wishes to broaden the definition of what constitutes a “package holiday” and would like holidaymakers to have a clearer idea of what will be covered under ATOL by introducing a new category of “flight plus” holidays.

The government is also keen to fill a black hole in the “Air Travel Trust Fund” – which finances ATOL and was hit recently by a number of high profile tour operator collapses – pushing the scheme into a £31.8m deficit, The Guardian reports.

Aviation Minister, Theresa Villiers said: “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.”

Theresa Villiers says that she will consider introducing further legislation within the ATOL scheme over the coming year.

There are still no plans to extend the ATOL scheme to protect “DIY” holidays – where flights and accommodation are booked directly with an airline or hotel.

However, people who buy flights costing over £100 with a credit card are given some financial protection under the terms of the Consumer Credit Act.

Many credit card companies will also refund money if the airline goes bankrupt, including the cost of unused return tickets.

Talking point: Are the new reforms proposed by the government just another tax on travellers or is this good news for consumer protection? Please share your comments, below.

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