From June 1, companies will be required to submit data from their year-end accounts, which will be used to inform the CAA’s licensing decisions.

The regulatory changes will kick-in nine months later than originally scheduled.

SBA holders will have to adhere to a set of four ratios, using figures from a company’s financial statements, while standard Atol holders will face a set of seven ratios.

The introduction of the new tests was first floated in the Rebalancing Atol consultation back in 2014. The current financial tests have been in place for more than 30 years.

The CAA is also bringing in a new online assessment tool and also reducing the burden for firms licensed between £5 and £20 million.

Andy Cohen, head of Atol, said: “In bringing in these changes, our primary objective, is to reduce the risk of travel company failure and the subsequent impact and disruption to passengers.

“The new financial assessments will mean we are better placed to properly identify, in advance, those companies that are in, or at risk of financial trouble, improving the outcome for consumers.”

While firms are likely to have some concerns about the changes, any move to try and reduce the number of travel failures is surely a good thing.