The Department for Transport (DfT) and Civil Aviation Authority (CAA) have today launched a consultation to seek views on options to reform ATOL bonding.
Reform would be an administrative simplification for tour operators and would not affect passengers. Since the introduction of ATOL in 1972, operators have always had to pay for arrangements to financially protect their passengers.
This document is the culmination of a consultative process with industry, which started in December 2005, on proposals to reduce the regulatory burden on tour operators. The consultation invites responses from stakeholders and other interested parties on two options for change: to continue the current bonding scheme with additional contributions to the back-up fund, the Air Travel Trust Fund (ATTF); or to replace bonding with an approach whereby tour operators would make contributions into a protection fund which meets all ATOL financial protection costs.
The second option proposes:
* the removal of bonding from 1 April 2008; and
* instead, tour operators make a flat rate contribution to the ATTF of £1 for each passenger booked on an ATOL holiday. This would cover all refund and repatriation costs arising from the failure of tour operators.
Transport Minister Gillian Merron said:
"The Government is committed to better regulation. This consultation is all about maintaining protection for the travelling public and reducing costly and unnecessary burdens on businesses. I welcome the consultation as a major step forward in ensuring a fair and effective system for the future."
Sir Roy McNulty, Chairman of the CAA, added:
"It is important to review the current bonding scheme, which has remained largely unchanged since the 1970s, and to consider whether it is still a proportionate approach to the risks that need to be addressed. Licence holders face increasing competitive pressures and these proposals represent an opportunity for them to reduce their costs."
Reform would be an administrative simplification for tour operators and would not affect passengers. Since the introduction of ATOL in 1972, operators have always had to pay for arrangements to financially protect their passengers.
This document is the culmination of a consultative process with industry, which started in December 2005, on proposals to reduce the regulatory burden on tour operators. The consultation invites responses from stakeholders and other interested parties on two options for change: to continue the current bonding scheme with additional contributions to the back-up fund, the Air Travel Trust Fund (ATTF); or to replace bonding with an approach whereby tour operators would make contributions into a protection fund which meets all ATOL financial protection costs.
The second option proposes:
* the removal of bonding from 1 April 2008; and
* instead, tour operators make a flat rate contribution to the ATTF of £1 for each passenger booked on an ATOL holiday. This would cover all refund and repatriation costs arising from the failure of tour operators.
Transport Minister Gillian Merron said:
"The Government is committed to better regulation. This consultation is all about maintaining protection for the travelling public and reducing costly and unnecessary burdens on businesses. I welcome the consultation as a major step forward in ensuring a fair and effective system for the future."
Sir Roy McNulty, Chairman of the CAA, added:
"It is important to review the current bonding scheme, which has remained largely unchanged since the 1970s, and to consider whether it is still a proportionate approach to the risks that need to be addressed. Licence holders face increasing competitive pressures and these proposals represent an opportunity for them to reduce their costs."
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