The DfT and the CAA have both launched consultations on plans to “to update the regulations which govern the Air Travel Organisers’ Licencing (ATOL) scheme”. The consultations cover the ATOL Regulations and the ATOL Standard Terms and Guidance and concentrate on proposed changes to enable the ATOL scheme to dovetail with the updated Package Travel Regulations 2018.
The main proposals (across both consultations) are:-
- The ATOL Regulations will be updated to adopt the new definition of a ‘package’ from PTD 2015.
- Insolvency protection for Linked Travel Arrangements (LTAs) will be implemented through the Package Travel Regulations 2018, through bonding, insurance or trust arrangements, and NOT via the ATOL scheme as expected. However, protection for a flight or flight inclusive package element of an LTA may still be provided via an ATOL.
- The Agent for the consumer ‘loophole’ in the current Regulations will be closed such that these agents will now be required to hold an ATOL.
- ATOL Flight-Plus will be revoked.
- Business-to-business and occasional ‘not for profit’ sales will be exempt from the ATOL scheme.
- “Agents for ATOL holders” will not be exempt from having to hold an ATOL if they are organising package holidays in their own capacity.
- ATOL protection will be extended to sales by UK businesses when they sell in Europe. The requirement to hold an ATOL will apply to UK businesses when they sell packages to consumers in Europe.
- EEA traders will be able to sell packages to consumers in the UK without an ATOL, though they will need to comply with the PTD 2015 using measures in their own Member States. Additionally, the CAA will no longer grant ATOLs to EEA businesses who would instead need either to sell into the UK on the basis of the protection arrangements in their country of establishment, or rearrange their business so they have a place of establishment in the UK and the sales hence become licensable under ATOL.
- UK Agents that sell packages organised by EEA Traders would consequently also be exempt, as the EEA Trader would already be responsible for providing insolvency protection under PTD 2015.
- There will be the introduction of a ‘flight-only ticket fully paid’ exemption which broadens use of credit card/IATA and Airline Ticket Agent exemption to enable travel businesses to sell confirmed airline tickets in circumstances where the airline has been paid in full at the time the consumer made their booking and paid the travel business, regardless of how that payment was made. A travel business can take advantage of it provided that in a single transaction for a Flight-Only the airline is paid in full and at the same time the consumer receives a ticket that is valid for travel.
- The ‘overseas sales’ exemption will be narrowed such that a return flight only departing outside UK will become licensable if the return flight is sold as part of the same trip as a UK-originating outbound leg.
- The ATOL certificate will be retained to support the information requirements in PTD 2015 and rather than being issued by the trader from which the consumer buys their holiday, there will be a new online certificate which will be issued through an online CAA system based on data that the seller submits to the CAA.
- In all cases where an ATOL product is offered for sale, the ATOL holder must state clearly and prominently and in close proximity to the advertised price that the product is ATOL protected and there will be additional requirements on businesses to give other general information to consumers when searching for holidays on websites.
- Reporting periods for Small Business ATOLs (SBAs) will be changed from annually to quarterly.
- ATOL holders will be required to proactively advise the CAA of any information the CAA should ’reasonably expect to know’, including any event that is likely to have a material impact on the financial resources or the operation of the ATOL holder.
- Existing enforcement provisions will be aligned with the changes being made to the scope of ATOL.
Travel businesses are considering the implications these proposals will have on them before the consultation closure date of 23rd March 2018. For some they will be significant – for the better and for the worse – but for others, implications will be minimal. For advice specific to your travel business, contact us!