New ATOL Regulation/New Package Travel Regulations

The CAA have published a response to the feedback from stakeholders responding to its consultation “Modernising ATOL” published in February 2018 . It gives full information about the New ATOL Regulations and accompanies the publication of a new version of the CAA’s Official Record Series 3 (ORS3), which includes ATOL Standard Terms for licences, required Agency Terms, ATOL exemptions, Accredited Body Standard Terms, and other ATOL information published by the CAA.

The CAA has stated that it intends to implement most of its proposals; but some changes have been made. The proposals relating to the implementation of and transition into relevant aspects of Package Travel and Linked Travel Regulations 2018 are being implemented in full and will take effect on 1 July 2018 but the ones less linked will have a deferred implementation date.

 

The main immediate changes are:-

• Those that harmonise the PTRs and ATOL Regulations in terms of definitions and applicability;
• Amendments to the CAA mandated contract terms for agents which deal with the issuing of ATOL certificates, the use of the ATOL logo by agents, the removal of the text of AST1 from the terms and a requirement to incorporate new agency terms with their agents within three months of new terms being published by the CAA.
• Changes to reporting requirements for small business ATOL holders and financial reporting generally to require all ATOL holders to make disclosure of material information.
• Changes to the types of and wording on ATOL Certificates

 

Also, there will be some reworking of the exemptions to when holding an ATOL is required:-

• Businesses established in the EEA (but not in the UK) will not need to hold an ATOL but the CAA have mandated a set of agency terms (similar to those already required with UK agents) that must be incorporated into a written agreement with all such agents.
• Small Aircraft – this exemption has been made unsuitable to use as a basis on which to sell in the manner of a scheduled airline.
• Flight-Only use of consumer’s credit or debit card. This exemption will enable businesses to sell confirmed airline tickets without an ATOL in circumstances where the airline has been paid in full at the time the consumer made their booking and where the consumer has the irreversible ‘right to fly’ on the ticket.
• This proposed restriction has not been implemented. It was on the current ‘overseas’ exemption and would have made licensable a return journey back to the UK if it were sold as part of the same trip as a UK-originating outbound leg.
• The ‘Corporate Sales’ has been removed in order to harmonise the new ATOL Regulations with the New Package Travel Regulations which exclude such sales for their remit.

 

Deferred obligations

The deferred obligations under the New ATOL Regulations largely relate to how consumer information is displayed and additionally, the CAA will not introduce the proposal that ATOL holders which advertised a specific flight must secure it straight away. Those measures will be implemented instead by 1 April 2019.

The proposed online ATOL Certificate system is still undergoing a feasibility study. The CAA expects to make a decision on whether or not to proceed during 2018/19.

Finally in its response, the CAA acknowledges the travel industry’s view that there is insufficient time for some changes, particularly system changes, to be made. They declare that they intend to take ‘a proportionate approach to the enforcement of compliance: ATOL holders are expected to take steps to comply immediately, but for a period of three months the CAA’s enforcement stance will be focused mainly on monitoring and gaining confidence that ATOL holders are taking steps to become quickly compliant.’ After that, they will review progress on an individual company basis, having regard to whether there is a material risk of consumer detriment.

For further information about how the New ATOL Regulations will impact on your business, contact us.