/ Travel & Leisure

Holiday ‘bust’ protection boosted – but not enough

Two eggs on beach with happy/sad faces

Millions more holidaymakers should soon be better protected from travel firm collapses. But the planned changes to reform the ATOL scheme don’t go far enough, and will still leave endless others unprotected.

‘Flight-Plus’ is the buzz word right now in the UK travel industry.

The Department for Transport has just announced plans to reform the ATOL (Air Travel Organisers’ Licence) scheme which protects package holidays if a company goes bust. It’s estimated that six million extra holidays will be covered – not before time!

Over the past couple of years, several airlines have gone under – Flyglobespan, Kiss Flights and XL Airways, to name a few. And in each case, many of the passengers were shocked to discover they weren’t entitled to free repatriation or a refund, all because of the way they’d bought their holiday.

The limitations of ATOL ‘protection’

Currently, if you buy a package through an ATOL-registered agent or tour operator, they should stump up if the airline used in the package goes bust. But the key problem has been in defining a ‘package holiday’.

Just because a company has an ATOL logo on their website or brochure, it doesn’t mean that the holiday you buy from them will necessarily be ATOL-protected. If, for example, you book and pay for a flight on their site, and then separately book a hotel through the same site, you’re unlikely to be covered.

The Government intends to extend the ATOL scheme to include these ‘flight plus’ holidays. So if you book a flight and accommodation (and/or car hire) within a day of each other through the same company, you’ll be protected.

That’s good news, as is the much-needed plan to ensure companies give customers a clear and honest explanation of whether their holiday is protected. It’s no wonder that people are confused when they aren’t told upfront, and when travel firms have been confused themselves!

New plans need to go further

But the overhaul needs to go further. For instance, individual components booked with different companies aren’t included in the proposals, nor are ‘click-through sales’. If I go onto an airline’s website to book my flight, then click on a link through to a different website to buy car hire or accommodation, I won’t be covered.

In a Which? member survey last year, more than 30% of the respondents said they arranged their last holiday by booking individual components with different companies and/or clicked through from one website to another. This suggests there will still be millions who are unprotected after the reforms come in at the start of 2012.

With the tough economic situation likely to last a while, we could well see more travel companies hitting the wall over the coming months. So double-check whether your next holiday is giving you financial protection, and if it doesn’t, at least consider buying Supplier Failure Insurance and paying with a credit card.