FUTURE SPRING FORUM


In partnership with Continued from page 40


would be “one way of thinking about how you price risk”, adding: “You could certainly think about that as an option to reflect the level of risk a business or model imposes. It’s not necessarily the only way. But variable levels of APC are potentially one way of pricing risk differently. “I’m conscious, though,


that there is a vast range of Atol-holders and we need a system that can be understood and can be operationalised by us. So how far you take risk pricing needs to be thought about.” Smith said: “We’re not


going to set out a solution at this point. It’s an opportunity to get input about the direction of travel. If we make changes, what is the way to transition? How do we take account of different-sized Atol-holders? “The consultation will give


a sense of direction to try to address how we strengthen [protection] for customers, get better risk pricing [and] work with different business models. [We’re] conscious there are a range of ways to manage or mitigate risk – bonding, insurance, trust funds.” Abta director of membership


and financial services John de Vial warned: “These changes are likely to lead to additional costs for some people. That is the reality. It might be the right answer, but whether people can deal with it in the short term is a different question. Taking this at a sensible pace and working through it carefully is important.” Smith said the consultation


would be out “in the next couple of weeks”, with the aim of producing “concrete proposals towards the end of this year”.


Future of Travel: Regulatory and legal experts discuss financial protection, Atol rene


CAA to spell out limits of control in protection review


The upcoming Atol reform consultation will not form part of a wider review of financial protection because much of the responsibility lies beyond the control of the CAA. Paul Smith, CAA group director


of consumers and markets, confirmed the consultation is imminent but told Travel Weekly: “We’ve focused deliberately on what is largely within our control. The current crisis and previous crises raise a range of other


John de Vial


issues. We’ll be conscious in this consultation of focusing on the levers the CAA can affect. That’s not to say the other stuff isn’t important, but it’s not something the CAA has primary control over.” Abta director of financial


services John de Vial said: “We support the need for this work.


The reality is the Air Travel Trust has to be refinanced after the hits it has taken. “We are for a more joined-up


approach. There is an opportunity post-Brexit for a review of the Package Travel Regulations. “The Department for Business


has said it will do that, but the timescale is unclear. The Department for Transport has started some work around the regulations and around the Airline Insolvency Review. So it’s an opportunity to bring these together. “But with everything the


government has on its hands, it’s clear these things aren’t going to happen in a joined-up way. We have to accept that.”


‘ATT can still fund failures but it needs refinancing’


The Air Travel Trust fund can continue to cover Atol failures despite being depleted by the failure of Thomas Cook in 2019 but will have to be refinanced, the CAA has confirmed. Speaking at the Future of Travel


Spring Forum, CAA group director of consumers and markets Paul Smith said: “With the support of the government, we are in a position to fulfil claims around Atol failures.” Smith pointed out the Air


Travel Trust (ATT) accounts for 2018-19, published last November, provided “a snapshot of the financial position” and said: “The fund, albeit significantly depleted, did have a positive cash balance.” The fund had a balance of


£35 million in November, with the government committed to underwrite any payouts for Atol failures above the amount in the trust, which accumulates funds


38 18 MARCH 2021


from the £2.50 Atol Protection Contribution on every Atol booking. Smith argued: “We have some


liquidity facilities. Also, we have government support in relation to the fund. We still have a cash balance and we were able to draw significantly on the insurance we had in place. “Having said all that, there is a


longer-term issue around refinancing the ATT. Right now, we don’t have insurance markets [operating] in the way we did previously. That is very much on our mind and on the government’s mind.” The accounts revealed the ATT


insurance policy expired in March 2020 and “could not be renewed as there was no available capacity in the insurance market”. Asked if industry contributions


to the fund will need to rise, Smith said: “It’s too early to say what the best combination of measures will be to address the issue. Traditionally, the


Paul Smith


intention is that contributions cover the expected costs of the fund. “We do need to replenish


the fund, but there is a question about the right timescale to do that recognising the challenges the industry has right now.” The trust’s 2019-20 accounts


remain unpublished. Smith said: “We’re working to get the 2019-20 accounts out. Hopefully, that is a matter of weeks away.”


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