The United Kingdom prides itself on having one of the most consumer-protective Regulatory regimes in the world. The ATOL scheme exists to protect consumers if their travel organiser should fail. It ensures consumers are not stranded abroad or do not lose money paid to the travel organiser for holidays and flights. But what does it do and how does it work?
For over 40 years the ATOL Scheme via the ATOL Regulations, has provided financial protection to holidaymakers booking air inclusive holiday arrangements. But the shift from traditional selling of ‘package’ holidays to internet-based ‘pick and mix’ sales of travel arrangements in the naughties meant that increasing numbers of holidaymakers were financially unprotected – without even realising it. By 2010, the UK Government recognised the need to update the ATOL Scheme to bring it into line with new trade practices. The ATOL Regulations were therefore updated in 2012 to introduce an extended definition of what travel arrangements needed to carry financial protection (‘Flight Plus’), as well as the introduction of the ATOL certificate to improve consumers’ understanding about whether their bookings were covered by an ATOL.
Travel companies holding ATOLs were also obliged to enter into standard term agency contracts with any agents they appointed to sell their flight seats. This was in order to ensure consistency of obligations and safeguarding of funds in every link of the selling chain.
The ATOL Regulations set out who can advertise and sell flight accommodation in the UK:
•the operator of the aircraft;
•an ATOL holder; or,
•a person who is exempt.
So, anyone selling a Flight-Only, a flight-inclusive package or a Flight-Plus in the UK must fall into one of the above categories, which means that, if you are not the operator of the aircraft or you are not exempt, you must hold an ATOL to provide financial protection for your customers. The full list of exempted entities can be found in Regulation 10 of the ATOL Regulations and the main ones are:
•an agent for an ATOL holder;
•a member of an accredited body; and,
•an airline ticket agent.
If you are unsure about whether or not you need to hold an ATOL to cover your business activity contact us.