24th July 2020

Government backs ATOL scheme

The Government has announced that it will underwrite the ATOL protection fund to safeguard travellers whose bookings are cancelled due to COVID-19.


By JTS Staff
Journal of Trading Standards' in-house team
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ATOL is a statutory scheme and the fact the Government will now effectively underwrite its credit refund notes gives a solid bedrock of security for customers

The Government has announced that it will back the ATOL protection scheme in a bid to bolster the confidence of holidaymakers during the COVID-19 crisis.

The move means refund credit notes will be valid if a booking is cancelled due to the pandemic, even if the company the consumer has booked with later collapses. It will apply to package holidays including a flight.

The Government said the decision has been made to enable consumers to ‘support the travel sector’s recovery from the pandemic by accepting a refund credit note’.

Bruce Treloar, CTSI Lead Officer for Holiday and Travel Law, said: “We welcome the confirmation that the Treasury will underwrite ‘refund credit notes’ where consumers have spent money on flight-inclusive package holidays which have been cancelled due to COVID-19.

“We would, however, have liked to have seen the Government extend its help to the very large number of package holiday organisers who have had to cancel holidays due to the pandemic. Some are providing credit notes, instead of refunds, if the consumer is happy to accept one.

“The Government’s underwriting of ATOL-protected refund credit notes will not protect consumers who purchase cruises, coach holidays or short city breaks where a flight is not included. CTSI want all ‘refund credit notes’ to be protected, so the consumer will find themselves in the same position as flight-inclusive packages.”

The ATOL fund is operated by the Civil Aviation Authority (CAA) and requires travel operators to pay a fee of £2.50 to protect each passenger booking in cases of insolvency. The money, which is held in a fund managed by the Air Travel Trust, is used to refund, repatriate or reimburse travellers for the cost of repaying for the affected parts of their trip.

According to Transport Secretary Grant Shapps, “We want to send a clear message to passengers that they can book their summer holidays with confidence, which is why we’re stepping in to protect refund credit notes issued as a result of COVID-19 cancellations.

“This is not only good news for anyone looking to get away for a break in the sun, but also for the aviation and travel sector which has been hit hard by the pandemic.”

Martin Lewis, founder of MoneySavingExpert.com, says: “This is a key travel intervention we’ve been calling for. It’s far from a cure-all, but ATOL is a statutory scheme and the fact the Government will now effectively underwrite its credit refund notes gives a solid bedrock of security for customers willing to take them.

“The pandemic has been devastating for the travel industry and travellers. Taking an ATOL credit refund note if you’re likely to rebook shows welcome forbearance and flexibility, and the fact that, if you don’t use it, it can be exchanged for cash gives peace of mind.”