p6-7 atol feb13 11/2/09 22:00 Page 6
news consumer protection
ttglive.com
Leaked documents prove the Air Travel Trust Fund was plunged
significantly further into the red by the collapse of XL Leisure
Group last year, while Abta and airlines call for other methods
to extend protection. Lucy Huxley and Lee Hayhurst report
Collapses double
Atol debt to £40m
ONE POUND
£40
TWOHUNDREDANDFI
FIGURES leaked to TTG have revealed the Air from Barclays of £60 million. The CAA has denied
Travel Trust Fund, which pays out when Atol reports the bank has refused to extend this.
holders collapse, has a £40 million black hole TTG understands a request has been made but
following recent failures. the bank has still to consider it.
Official documents seen by TTG show With many companies desperately trying to
that the fund’s expenditure – payouts for failed stay afloat, experts believe a £20 million buffer
companies, including XL Leisure Group – was just may not be enough to see the ATTF through to £90MIL
short of £90 million over the past 10 months. October, when a decision on whether the APC
The CAA was holding bonds for those firms will be increased is expected. The CAA has a
APC BACKLASH.
totalling £48 million, including XL’s bond of £250 million insurance policy with AIG but it has
£42 million. This gave it enough to cover half the not indicated any intention to claim on it.
cost of that failure. The CAA’s David Moesli earlier insisted there
‘Extend Atol, but
This means the call on the ATTF since last were enough funds to cover XL’s collapse.
March is almost £42 million, on top of the ATTF’s He said the fund would meet the total cost,
keep APC to £1’
existing deficit of £21 million. estimated at “just south” of £80 million, and
Taking interest into described reports that the ATTF EXTENDING Atol to cover non-flight packages and
account, but deducting £1 was insolvent as “speculative” allowing scheduled airlines to join
per passenger Atol Protec- and “counterproductive”. voluntarily could net £10 million extra a year –
tion Contributions (APC) to “We do not know how much and enable the APC to be kept at £1.
date of around £18 million, XL is going to cost because we FTO director-general Andy Cooper said the
leaves the AFFT looking at a are still getting claims in. The answer to Atol’s spiralling debts was a new
£40 million-plus black hole. ATTF remains viable.” “air-plus” approach, widening the scope of what
The fund is backed by a it protected under Atol.
five-year overdraft facility David Moesli: reports are ‘speculative’ ■ ‘Levy quick fix’: Letters, p35 The CAA has confirmed there will be a
six-week consultation “sooner rather than later”
on the level of the APC.
ATOL DEMANDS.
Experts estimate the levy needs to be at least
‘Let firms go under’, CAA warns
£2.50 to bring in the £50 million a year needed to
replenish the ATTF. An increase in the levy is
widely expected to be confirmed in October.
THE CAA has admitted it would rather He said the CAA’s stance was not But industry big guns at an e-tid briefing shot
see struggling firms go to the wall now about protecting its own position but down suggestions that APC should be increased.
than increase the industry’s exposure that of the industry as a whole, which Both Tui Travel and Thomas Cook quoted an
by racking up sales before going bust. pays for the Atol protection scheme via original CAA consultation document on the
With the March renewal period loom- the Atol Protection Contribution. introduction of the APC.
ing the CAA is poring over the books of Asked if the CAA was taking account This asserted the financial model on which
travel firms and insisting that any that of evidence that booking levels were it was based could withstand a £250 million
struggle put more liquidity into their business. holding up but lead-in times were falling, hitting failure — as well as a deep recession.
According to an insider, this was pushing firms’ cashflows in the short term, Moesli said: Mike Bowers, Tui Travel general counsel, said:
some close to insolvency, but David Moesli, “You must have a convincing argument it’s all “We were told the setting at £1 was carried
deputy director of the CAA’s consumer protection going to come together. It depends on when you out after detailed financial modelling. We are
group, was unapologetic. look at the bookings, and what sort of shortfall.” entitled to rely on what we were told.”
06 13.02.2009
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