Air Travel Organisers’ Licensing Bill

The Air Travel Organisers’ Licensing Bill (also known as “the ATOL Bill”) is a Government Bill, announced in the Queen’s Speech on 21 June 2017. Introduced to the House of Commons, the Bill had its Second Reading on 3 July 2017, and completed its remaining stages, passing unamended, on 11 July 2017. The Bill had its First Reading in the House of Lords on 12 July and is expected to receive its Second Reading on 5 September 2017.

This is a very short Bill, comprising just four clauses. It is intended to modernise the ATOL (Air Travel Organisers’ Licensing) scheme; a financial protection scheme managed by the Civil Aviation Authority (CAA) on behalf of the Secretary of State for Transport. At present, the ATOL scheme only applies to sales made in the UK

The scheme was set up to protect consumers. By law, every UK travel company which sells package holidays that include a flight (or more recently a “flight-plus” arrangement) is required to hold an ATOL. If a licensed firm goes out of business, the CAA can refund protected consumers or, if they are already on holiday, ensure their repatriation home. The scheme is funded by contributions from the travel companies. The ATOL scheme is a key mechanism by which the existing Package Travel Directive (90/314/EEC) is implemented in the UK. This Directive places an obligation on companies selling package holidays to have insolvency protection in place.

In recent years, there have been significant changes in the travel market with the emergence of new digital business models and changes in consumer purchasing behaviour. Consumers are using the Internet to “mix and match” or “dynamically package” the components of their holiday in a way that often falls outside the scope of ATOL. This had led to a fall in ATOL sales as a share of all leisure flights, from over 90% in 1998 to just under 50% in 2009.

The ATOL scheme was partially reformed in 2012 to create more certainty about when a holiday is ATOL protected. Following a public consultation in 2016, the Government decided that the scheme should be further updated. The measures contained in the ATOL Bill are intended to:

• update the ATOL scheme so that it can respond to innovation in the travel market; and
• to align the scheme with a revised EU Package Travel Directive (2015/2302/EU), which must be implemented by 1 January 2018.

The Government has said that the Bill will have the following benefits:

• ensure that the ATOL scheme keeps pace with innovation in the online travel market, and that appropriate protection is in place regardless of whether consumers book online or on the high street (in effect, extending ATOL protection to a broader range of holidays);
• make it easier for UK businesses when selling air holidays across the EU, as they will be able to trade under the UK’s ATOL scheme rather than the regimes in each country they sell to; and
• enable the ATOL scheme to adapt to future trends, including changes that may be brought about as the UK leaves the EU.

Proposals to update the ATOL scheme were initially included in Part 3 of the Vehicle Technology and Aviation Bill 2016-17 (HC Bill 143). The Bill fell at dissolution, after it received Second Reading on 6 March 2017 and had completed its Committee Stage. The ATOL Bill revives the ATOL provisions contained in the previous Bill. All four of its clauses would apply to the whole of the UK.