BUSINESS NEWS Atipac report: Advisory body outlines failure threats to consumer protection. Ian Taylor reports


Atipac warns government of pressures facing sector


The Air Travel Insolvency Protection Advisory Committee (Atipac) has issued a series of warnings to the government on the impact of changing travel restrictions, imminent withdrawal of financial support and proposed Atol reform. The committee, which advises the


transport secretary, has warned last- minute changes to travel restrictions risk “a higher level of travel organiser insolvency” and that if the furlough scheme and Coronavirus Business Interruption Loans (CBILS) cease from the end of September “many businesses could fold”. The warnings appear in Atipac’s


annual report published in July which questions whether the government has provided “clarity and confidence” for consumers as the Global Travel Taskforce promised, noting the traffic light system and Foreign Office advice have “created confusion”. The report calls on the


government to review “whether consumer protection is adequate for future public health emergencies”


Shapps urged to review safeguards for airline failure


The Atipac report calls on the CAA to phase in changes to Atol requirements and “include the use of consumer money by airlines” in the reforms. It also urges the government to widen the review of consumer


travelweekly.co.uk


Cancellations have triggered refund problems


and urges the CAA to phase in its proposed Atol reform “over a manageable period”. Atipac comprises trade, CAA and


consumer group representatives. Its report argues the furlough


scheme and government-backed loans “have been crucial in ensuring companies with no other source of income have continued to operate. If this financial support were to cease in September or before international travel resumes at scale, many businesses could fold.”


financial protection to include airline insolvency and the Package Travel Regulations (PTRs). The government


commissioned an Airline Insolvency Review in the wake of Monarch’s failure in 2017 but has sat on the recommendations. The Atipac report notes


“the context in which the Airline Insolvency Review’s work was


It adds: “Last-minute changes


to travel advice [are] likely to be associated with a higher level of insolvency. Short-notice changes have created a great deal of confusion. The traffic light system, in addition to travel advice, has created confusion over . . . travel requirements.” The report notes cancellations due


to the restrictions meant refunds had to be provided “on an extraordinary scale”, creating pressures “in all parts of the travel supply chain”. It notes the refund credit note (RCN) regime necessitated by this falls “outside the consumer rights framework”. The report also welcomes the


government pledge to give the CAA stronger powers to take action against airlines for failing to make refunds. Atipac notes 34 Atol holders


failed in the 12 months to March this year – “the largest number for many years”. An estimated 68,000 consumers were affected. However, two-thirds of these


were the result of just two failures: Fleetway Travel in July 2020 (15,000) and STA Travel in August (32,000).


published has changed” but argues: “There is merit in developing a regime that protects consumers and has the potential to reduce costs to the taxpayer if an airline were to fail in future.” On Atol reform, it insists


any changes “must be phased in over a manageable period” and argues: “Airlines and travel organisers are part of the same


ecosystem, especially as regards the cash used to pay for flight seats.”


‘Lack of business insurance raises risk of insolvency’


The pandemic “has raised concerns” over insurance cover for consumers and travel firms, the Air Travel Insol- vency Advisory Committee argues. It cites the failure by some firms


to pay full refunds when consumers cancel trips due to government advice and warns of increased risk of insolvency if suitable insurance is not available as travel resumes. The Atipac report notes


travel insurance policies refer to Foreign Office advice but traffic light guidance comes from the Department for Transport and advice on school trips from the Department for Education. When the Foreign Office warns


against travel, consumers “naturally seek to rebook or cancel . . . however, some businesses have refused to provide refunds on the basis that flights could still go ahead”. The report notes some


committee members “feel the insurance industry took a step back from paying out on policies”, leaving businesses “exposed to the full range of [refund] costs”. It warns of “a higher risk of


insolvency” due to “insufficient insurance products for businesses”.


The report suggests a review of


the PTRs should re-examine “the two-week timeframe for providing consumer refunds”. In an introduction to the report,


which goes to transport secretary Grant Shapps, Atipac chair Sandra Webber argues: “Now is the time to address pre-pandemic problems. Brexit has provided an opportunity to review the PTRs; the CAA is consulting on Atol; [the] Airline Insolvency Review of 2019 could be picked up.”


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PICTURE: Shutterstock/DimaBerlin


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