NEWS SPECIAL REPORT
Atol renewal fears A
As operators apply to renew their Atols, concerns are growing that some small specialists may not meet the CAA’s financial criteria to continue trading. One operator tells Juliet Dennis about being hit for a £160k cash injection
specialist operator says it may be forced to close after being told it needs a £160,000 cash injection
to renew its Atol next month. The operator, which has had
an Atol and traded successfully for nearly 20 years, has survived the pandemic and remains solvent. Its only “crime”, say worried
bosses, is that it has rebooked most customers to future dates instead of issuing countless Refund Credit Notes. This means that instead of having around £1.5 million worth of booked holidays, it has nearly £3 million. And while it has nearly doubled the amount in terms of the value of holidays on its books, it has less than £10,000 in RCNs. “All these holidays were sold
under our Atol licence so they should be protected,” said the managing director of the company, which has declined to be named for fear of causing panic among staff. “We are a solvent business. Our
turnover is £2.5 million. We’ve always been in profit. If I were to close the business and pay all my customers back, and if all the airlines and suppliers paid me back, I could pay all the bills.” The company submitted its Atol
return early, only to be told by the Civil Aviation Authority, which oversees Atol, that it had failed four of the financial ratio criteria needed to renew its licence.
The existence of a CBILS loan on a balance sheet impacts on an Atol renewal, effectively wiping it out
“We were knocked flat by it,”
said the MD, who is in talks with the CAA. “We were astounded to be asked to invest £160,000 – we don’t have that money. That would force us into bankruptcy, and it will end up costing a lot more than £160,000. “We are a family business. This
company is our pension. We have not got shareholders to go to. The only way we can raise that money would be if we could raise it personally.” The company’s accountants have
scoured its finances and the operator has contacted local MPs to challenge the CAA, so far to no avail. “We just don’t understand,” said the MD. “Atol is like an insurance. This is like asking us to insure a Ferrari rather than a Mini.” The Atol financial test failure is
triggered by a drop in a company’s net asset worth, according to the operator, and leads to the CAA asking for cash injections. Ironically, according to the company, the loans offered by government to sustain businesses during the pandemic are partly to blame. He added: “What travel operator
has not lost thousands of pounds these last 19 months? All these losses and then having the government- backed CBILS loans, designed to support business, all impact on a company’s bottom line – and what Atol deems as your net asset worth. “It seems inappropriate that the
existence of such a loan on a balance sheet impacts on an Atol renewal as that effectively wipes out the help the government intended.” Already other operators have
been in touch, concerned by a fellow company’s plight, and worried they could end up in the same boat. The MD said: “A few weeks ago,
many had not even looked at their renewal paperwork and they were all dreading it. They are scared about submitting their renewals.” He fears the worst – small,
independent operators failing, with the result there will be less choice for consumers, higher prices and more consumers booking unprotected trips. “The small independent specialist
tour operators like us will disappear. This will be a huge loss to the consumer and result in less choice of specialist holidays and ultimately higher prices for the consumer. It will force customers to take more risks with their holidays, booking accommodation direct online with separate flight bookings, meaning
they have no protection at all.” i Atol consultation, page 54
CAA CALL TO RENEW
The Civil Aviation Authority (CAA) was poised to issue a reminder to Atol holders seeking to renew licences this September to get applications in as T
ravel Weekly went to press. It was expected to remind
holders of its pledge to help businesses through the renewal process, which takes place annually in March and September. Thirty-four Atol holders
failed in the 12 months to the last renewal date at the end of March. In April, the CAA confirmed it had renewed 554 of 742 licences, with an additional 89 still in the process. Almost 100 chose not to renew, 13% of the total and almost double the rate of the year before. At the September 2020
renewal, 1,000 out of 1,261 Atol licences due to expire were renewed or 79% of the total, with 176 (14%) not applying to renew. Speaking on a T
ravel Weekly
webcast in March, CAA group director of consumers and markets Paul Smith insisted: “Companies will continue to see a CAA that looks to engage with them. We understand people remain in a very challenging place. We’ll look to factor that into our decisions.”
10
2 SEPTEMBER 2021
travelweekly.co.uk
PICTURE: Shutterstock/allstars
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