ATOL shake-up could protect against more travel company insolvency

Published on May 24, 2013 by Crawfords Accounting

Travel company insolvency can cause massive disruption to holidaymakers, who might find their flights cancelled, accommodation unavailable, or other parts of their package tour go undelivered.

ATOL-protected tour operators help to reduce the risk to travellers by ensuring repatriation costs are covered in the event of company insolvency.

However, the scheme was established in the 1970s and has gone largely unchanged ever since – leading the Department for Transport to question whether it is still working as intended.

Aviation minister Simon Burns says: “The time is right for a fundamental review to consider whether the scheme is still the best way of providing consumers with financial protection, or whether there might be more efficient and effective alternatives.”

Meanwhile, seeking administration advice as soon as financial difficulties present themselves remains an important step for any company whose customers are likely to face significant disruption in the event of company liquidation.

Some travel companies, for example, may be covered by Flight-Plus regulations, for passengers who book a flight and accommodation or car hire within a two-day period, helping to deliver the same kinds of protection as have applied to package tours for several decades.

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