John de Vial said the new regulation category – due to be introduced into law as part of changes to the Package Travel Directive (PTD) in 2018 – “must be very distinctively different” from the way in which a current Atol-protected package certificate looks when given to customers.
He told TTG that the collapse of Monarch Airlines and the subsequent government-led repatriation had left consumers confused about whether holidays were protected or not.
And he added that new elements in PTD such as LTAs were likely to cause further perplexity, leading customers to potentially falsely believe they are protected, ultimately “damaging” future confidence in the system.
“My worry is that if you just give the Atol badge to LTAs… and the consumer gets an Atol certificate, they are going to assume it’s the same as a package,” de Vial said.
“These are complicated things, unless the consumer is a barrister they are not going to understand it…There is a real danger that that will be the case.
“There will be T&Cs but will they be understandable… should we risk the Atol brand?”
An LTA is defined as a holiday that includes two or more travel services (when booked within 24 hours of each other) and is created when all the components of a booking are organised, invoiced and paid for separately, meaning the customer has entered into separate contracts with the trader.
Customers are only protected for the agency’s insolvency, not those of the travel or accommodation provider. And once pipeline monies have been passed on to the supplier, there will be no protection for the customer should the airline or operator fail.
“What it comes down to is, ‘how do you present [the differences in protection] to the trade and to consumers and make it really, really clear that it’s not the same protection,” de Vial said.
He also warned that if not correctly advertised, LTAs could lead to a rise in the number of travel companies operating with “Fig-leaf Atols” – using the umbrella of the regulation to sell a larger number of unprotected products.
“We have to move to a system where the badge much more attaches itself to the holiday being booked and not the company, so companies can’t misuse the Atol badge to give a false sense of security.”
He said he believed the next consultation over PTD, expected later this year, would feature a serious discussion on “how [LTAs] get badged”.
“We saw that with the Monarch Group – where you have a number of licenses within that group but what customers’ were booking and whether they were protected under the Atol system or not, was a different issue.”
