Holidaymakers will be given more protection if their tour operator collapses under new Government plans.
Ministers want to reform the Air Travel Organisers’ Licensing (Atol) scheme, which compensates package holiday passengers if a firm goes bust before they fly and helps return them home if a company goes into administration.
Announcing the proposals in a written statement to the Commons, Transport Minister Theresa Villiers said: “The proportion of holidays with Atol protection has fallen and it can be difficult for consumers and the travel industry to know which holidays are protected and which are not.
“The proposed reforms will make it easier for everyone to understand which holidays are covered and will restore protection to what looks like a package holiday, but now falls outside the legal definition.”
Ms Villiers told MPs that big tour operator collapses in 2008 and 2010 left the body which funds the scheme – the Air Travel Trust Fund – struggling financially, with the Government underwriting it for £42 million.
The plans include covering “flight plus” holidays where flights and hotels are booked during a short space of time, but are not defined as package holidays; forcing travel agents to tell tourists if a break is not Atol-protected so they can consider taking out separate insurance; and scrapping current arrangements to make the Atol scheme clearer for would-be holidaymakers.
Ms Villiers said: “Reform is needed to secure the sustainability of the fund so it can continue to provide financial protection for consumers, while reducing and eventually eliminating the exposure to taxpayers.”
Ms Villiers said the plans could come into effect early next year.
Last year 43,637 holidaymakers were repatriated under the scheme and another 132,820 received full refunds when their tour operator went bust.
Atol was last overhauled in 1995.