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Expert Comment: Extended ATOL protection for holidays introduced

ATOL logo Thursday 3 May 2012

After one of the wettest Aprils on record in the UK our thoughts inevitably turn to booking our summer holidays. After surviving the British winter most of us want to escape to somewhere warm over the summer, which usually means an overseas holiday. This is nothing new, and something we have been doing in increasing numbers since the 1970s. The British took over 70 million trips abroad in 2011, spending almost £30 billion on overseas travel. However, how we book and organise our holidays abroad has changed dramatically.

When ATOL (the Air Travel Organisers Licensing) protection was first introduced by the Civil Aviation Authority in 1973 most of our holidays abroad were what's known as 'heavy packages'. We would have gone to a high-street travel agent and bought a package holiday (usually including a flight, airport transfers, accommodation, possibly car hire etc) that had been packaged together by a tour operator. Back then most people didn't have that much experience of travelling abroad and were more than happy to have the strain and the hassle of organising a holiday taken care of. ATOL protection offered financial protection to those holidaymakers in the event that their holiday company ceased trading: they wouldn't be stranded abroad and they could claim their money back.

Fast-forward 40 years and our overseas holidays have changed dramatically: where we holiday; the number of holidays we take; and most importantly, how we book our holidays. The ATOL protection from the 1970s was looking increasingly out-dated and had not kept-up with holidaymakers' changing demands and behaviour. Over the last few years most of us will have seen the news footage of thousands of holidaymakers stranded abroad as major tour operators such as XL Leisure and Holidays 4 U ceased trading. ATOL had failed to keep abreast of the most significant change in tourism distribution that had occurred from the 1990s onwards: the growth of online holiday retailers.

What the online retailers offered that the traditional high-street travel agent did not was the 'dynamic packaging' of holidays. Holidaymakers could now tailor-make their holidays online from the comfort of their own home. In 2011 over 60% of British holidaymakers booked their overseas holidays this way. However, what many holidaymakers didn't realise was that their lovingly crafted holidays were not ATOL protected. More recently, as holidaymakers have become even more sophisticated and experienced,  the growth of booking direct with airlines and hotels has become increasingly popular. This means that many of the traditional high-street, and even the online travel companies are operating in an extremely competitive environment, and some have been forced to cease trading.

The new extended ATOL protection, which is often referred to as 'ATOL Flight-Plus', offers consumer protection in the case of failure of the travel company that has provided the 'dynamically packaged' holiday. Unfortunately, this may be a case of too little too late for many British holidaymakers who book their holidays directly with flight or accommodation providers. If this all seems a tad confusing that's because it is! Even some industry professionals are unsure as to which holidaymakers are covered by ATOL's Flight-Plus, and with protection certificates not being issued to customers until October, it looks like this confusion is set to reign during the busy summer holiday period this year. My advice: if you're taking an overseas holiday this year then make sure you have decent travel insurance (policies that include 'supplier failure' or 'scheduled airline failure'). Happy holidays!

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