As the Atol reform consultation comes to a close, the responses from the travel industry are flooding in and sparking debate.
It is fair to say that it is agreed that reform of the Atol scheme is necessary because the current system does not provide adequate financial protection to consumers and this has been demonstrated in the recent collapses of travel companies such as Goldtrail and the latest being Holidays 4UK Limited.
The Department of Transport produced some draft regulations which were put forward for consultation in February 2011. This consultation ends today.
The main issues for debate that have come to light are, the timetable for implementation and whether airlines and business travel should be specifically excluded from the regulations.
Enough time for travel companies to comply?
ABTA raises a serious concern in relation to the government’s timetable to bring in the reforms in that the industry is going to struggle to put in place all the practical elements that come about from the reforms such as changes to systems and documentation. This represents concerns echoed across the industry and provides added pressure to the industry particularly in these times of economic downturn. There should at least be a phased introduction to allow travel companies to make the necessary arrangements and take appropriate advice.
Business travel to be specifically excluded?
The Dft has sought to exclude business travel by providing an exemption for credit sales but this will not exclude all business travel. ABTA have proposed to specifically exclude sales to limited companies as a measure to exclude business travel. This will assist but those companies selling only business travel will have to be careful to ensure that they do not fall within the Atol scheme.
Airlines to be specifically excluded?
ABTA supports the proposals from the DfT but calls them the ‘first step’ towards improving financial protection for consumers. The second step being the inclusion of airlines.
In contrast to ABTA’s response, the Board of Airline Representatives (BAR UK) is highly critical of the draft regulations. Amongst various criticisms made, they call for the regulations to be re-written to specifically exclude airlines.
The DfT maintain that in order to include the airlines in any Atol regulations, primary legislation is required. This essentially means that a Bill must be passed through parliament whereas the current draft regulations can be made under the powers conferred by the Civil Aviation Act. If this is correct it would mean that even if the regulations could be interpreted to apply to airlines, they would not be legally enforceable.
In a statement made to Travel Weekly yesterday the DfT confirmed that primary legislation will be required to bring in airlines. Primary legislation is planned in the form of the Airport Economic Regulations Bill and the parliamentary process is due to being in the next parliamentary session - (early 2012).
What’s next?
It is now down to the DfT to take on board all these comments and to consider how they may best proceed.
It is fairly possible that this will result in a delay to the reforms. The Airport Economic Regulations Bill may even catch them up which may prevent the need to amend the regulations to exclude airlines.
