NTI Newsroom Exclusive: Is ATOL Destroying Small Holiday Operators?

Posted on Jul 28, 2021. by NTI

The NTI Newsroom have been given exclusive access to the new rules, issued by the Civil Aviation Authority (CAA), in a document entitled 'Assessment of funding arrangements and the protection of customer money'. It has been manouevred into place by ATOL, an acronym that has become synonomous in many traveller's minds with financial safety and certain redress in the event of yet another travel meltdown.

However, ATOL (Air Travel Organiser's Licence) runs a monopoly of cover and oversight, charging members for the past 18 months, even as cobwebs gather on aircraft all over the world. At the centre of the document is a statement that 'customer money is the money paid in advance by the consumer to the ATOL holder for the licensable booking'. If you are booking a foreign wedding trip, a safari or just a cheeky holiday looking for beetles in the Amazon basin whilst feasting on many of the easier to find varieties, you expect to pay a deposit. This deposit is used by your operator (often a specialist in such travel) to book accommodation, transfers, guides, tours and the accessories that will make your holiday work.

ATOL say that: "Issues arise when this money is used by the ATOL holder to fund other business expenditure rather than the specific booking. Meaning that the customer monies are in effect being utilised as a low-cost source of working capital funding for travel companies to finance their operational activities and growth, as opposed to seeking funding from other sources with the appropriate cost of capital attached." By this they are presumably referring to the expenditure necessary for any business to perform and offer a service - you know, stuff such as electricity, the Internet, door handles, the occasional cake, etc.

ATOL's point of view: "This approach can lead to an over reliance upon advanced customer monies and undercapitalised ATOL holder balance sheets."

One ATOL holder's point of view: "By not permitting access to any customer funds until the day after the customer returns from holiday effectively means they will have to pay for a customer's luxury holiday in advance (maybe as much as two years in advance), and hope the customer doesn't cancel. If they do, then the cost of the holiday will fall on the operator who paid out because the customer is entitled to a full refund.

No small or medium-sized expert travel company will be able to afford to do this."

The CAA document states that all customer monies (paid either directly or indirectly through an agent) would be held in a secure segregated account. This could be done through either a customer escrow, or trust account. The ATOL holder would be
able to remove the cash from the segregated account the day after the customer returned from their holiday. No monies could be paid from this account prior to the customer’s return, including prepayments to suppliers such as airlines or any release of the ATOL holder’s profit.


Which operator or agent will be able to persuade a wedding venue, a lodge, a travel guide, etc. to make a final booking, but not receive any payment until the customer has had a lovely time and returned to Gatwick with a strange rash and 5,000 photographs of a butterfly? It is twelve shades of total insanity.

There are pretty pictures in the CAA's document, many of cartoon planes flying above piles of cartoon money, but they appear to have only a cartoon view of both. Add to this the fact that other European operators will not be subject to the same rules and governance, so will get first dibs on all accommodation, tours, flights, etc. and it combines to describe a complete nightmare for a group of experienced travel companies in the UK who are looking directly at the swirling water at the bottom of a pan.

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