The CAA run a consumer protection scheme called the ATOL. As with the PTR, it is designed to protect consumers in the event of their tour operator ceasing to trade. The difference is that the ATOL applies to any travel booking that includes a flight. So it does cover a flight only booking, and obviously it does cover say a flight and hotel booking. It does not apply to the hotel booking with car hire.
As with the PTR, your business must provide a consumer guarantee, in this case agreed with the CAA. In the event of your company getting into financial difficulties, the customers to whom you sold a package are guaranteed their holiday, their cash or safe passage home. If you offer this guarantee you are an ATOL holder.
You can sell to a consumer without an ATOL by being the retail agent of the ATOL holder. This requires the agreement of the ATOL holder as they essentially carry the risk of failure ie they offer the guarantee to the consumer for your bookings.
One additional piece of complexity is that a flight may be sold by an airline to a customer through more than one ATOL holder. Ie Airline sells to ATOL holder 1, who sells to ATOL holder 2, who sells to the consumer. In these cases, the ATOL holder nearest the customer (ATOL holder 2 in this example) provides the guarantee against failure. If the airline fails, then ATOL holder 2 in this example, has to provide the customer guarantee.
Finally, airlines do not need to hold an ATOL. As a flight ticket provider they are exempt from this part of the CAA regulation. In theory you could become a general sales agent of the airline and sell their tickets. However, this is unlikely to be an option for a start up. Therefore you will need to hold at ATOL or be the retail agent of an ATOL holder.
In order to run your business within the ATOL rules you need to implement one of the following –
- TTA: Join the TTA and get a T-ATOL, which comes at a marginal cost to our members as the trust fund provides the core to the consumer protection required by the ATOL. The T-ATOL provides consumer protection for up to 20,000 flights per year.
- CAA: Agree on a bonding level with the CAA, purchase this bond which is held by the CAA. This will require significant up front costs. In April 2008, the CAA will introduce the ATOL levy which will charge ATOL holders a fixed cost per passenger (initially set at £1). As a new business, this is in addition to the cost of bonding.
- Retail agent: Constrain your business to act as the retail agent of an ATOL holder – ie. Sell the products of the ATOL holder.