The Air Travel Insolvency Protection Advisory Committee (ATIPAC) has urged the Government to respond positively following the recent Department for Transport and Civil Aviation Authority (CAA) consultation on the reform of ATOL bonding. In its seventh annual report, published yesterday, ATIPAC notes that the introduction of the £1 ATOL Protection Contribution (APC) will reduce costs and a significant part of the regulatory burden for the travel industry.

ATIPAC also believes that the introduction of a £1 contribution would be an important opportunity to help educate the travelling public about the benefits of financial protection and the travel products that are protected.

John Cox, Chairman of ATIPAC, said: “The past year has seen a further decline in the number of air travellers that are financially protected and there is still consumer confusion about whether or not the flights and holidays they purchase are protected. The Committee believes that the introduction of the APC would be a golden opportunity to increase consumer awareness by having clear statements on advertising and invoices when products are financially protected. This information should also be complemented by an appropriate and effective consumer awareness campaign. Even though the introduction of reform in ATOL bonding would not cover all air travellers, the Committee welcomes the current proposals as a step in the right direction. We urge the Government to respond positively to the outcome of the consultation as soon as possible.”

In its report, ATIPAC records that in the year ending 31 March 2007, 27 ATOL-holding travel companies collapsed, two more than in the previous year. The failure of HCCT Holidays Ltd in December 2006 was the largest failure; the CAA repatriated 800 HCCT passengers and refunded 40,000 others at a cost of just over £5 million.

During the 12 months to this March, ATOL enabled 4,706 customers of failed tour operators to complete their holidays and return to the UK and 54,116 received a refund of advance payments. For the year, total expenditure on claims and repatriations was £14.2 million, of which £3.2 million was provided by the Air Travel Trust Fund.

The Fund’s deficit increased to £20,055,252 in the year ended 31 March 2007 and ATIPAC has welcomed the introduction of legislation in the Civil Aviation Act 2006 to replenish the fund and expects that the replenishment arrangements will be incorporated into the APC.