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Supreme Court decision makes swift reform of ATOL scheme vital to protect holiday-makers, says CAA

Friday 30, July 2010

The Supreme Court has this morning announced its decision not to hear the Civil Aviation Authority’s (CAA) appeal in the case against Travel Republic.

The case covered an important point of law raised by the CAA to provide clarity for consumers and the travel industry about the definition of a package holiday, so the CAA is disappointed that the Supreme Court has not been prepared to consider it, given its impact on consumer protection.

This decision now leaves a large number of holidaymakers at risk in the event of a travel organiser failing. The CAA is therefore urging the Government to move quickly to reform the ATOL scheme and introduce the proposed ‘Flight Plus’ financial protection in order to restore cover to consumers who may wrongly believe that they are currently financially protected.

This change would mean that whenever someone booked a flight, plus another element of a holiday at the same time, they would be protected by ATOL should their operator cease trading – allowing them to finish their holiday and be repatriated to the UK, or get their money back if they were yet to travel. Currently, because of the radical changes over the past decade to the way the travel industry operates, that is not always the case.

Richard Jackson, CAA Director of Consumer Protection, said: “Over the past year we have been working with the DfT on proposals to reform the ATOL scheme, and we very much welcome the Secretary of State’s recent statement that he sees the need for reform. Unfortunately, today’s decision means that much-needed clarity will now not be provided through the Courts, making it more urgent to push ahead to reform the scheme, ensuring that people receive the protection they expect, and often incorrectly believe they are receiving.”

Recent failures, including that of Goldtrail only a fortnight ago, have highlighted that there is widespread confusion amongst the travelling public and the travel industry about when they are, and are not, protected by ATOL. Today’s decision means that the sole avenue now open to minimise that confusion is reform of the scheme. 

Research published only yesterday by the Air Transport Users Council showed that a third of people did not know if their last flight was financially protected or not, and 34% of respondents did not know if the last travel insurance policy they had included financial protection. This highlights the clear need for clarification for the consumer to understand what is and is not covered.

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