Air Travel Organisers’ Licensing Bill

Julian Knight Excerpts

2nd reading: House of Commons
Monday 3rd July 2017 Commons Chamber

[Robert Courts]

I am grateful for my hon. Friend’s timely intervention, as the next page of my notes deals with clause 1. Existing ATOL legislation applies only when the first leg of a relevant flight booking departs from a UK airport. The new legislation introduces a single-market approach to insolvency, whereby EU-established companies will be required to comply solely with the insolvency protection rules of the state in which they are established, as opposed to the place of sale, which is the current position. The legislation is therefore much wider, and the company will only have to be established.

[Julian Knight (Solihull) (Con)]

Does my hon. Friend agree with me and several consumer groups that £2.50 is a low price to pay for ATOL protection compared with the cost of standard travel insurance? In the longer term, we might see a decline in the cost of travel insurance as more holidays are covered by this enhanced ATOL protection.

[Robert Courts]

My hon. Friend makes an excellent point. He is right that the ATOL scheme is funded by a levy of approximately £2.50 per protected passenger and that it would be extremely unwise of any holidaymaker to go abroad without adequate travel insurance. I encourage everyone always to have such insurance, although it can sometimes be pricey, especially if someone is looking to protect themselves against some of the more routine failures that are easily covered in the ATOL scheme. However, more serious misfortunes can occur when people are on holiday, which is why travel insurance is, of course, still advisable. As my hon. Friend suggests, the cost of insurance may come down in time as a result of this enhanced package.

Clause 1 will allow travel companies established in the UK that sell flight-inclusive packages to use their ATOL membership and protection to cover all EU-wide sales without needing to comply with the insolvency protection rules of any other member state. Clause 2 deals with funding and qualifying trusts within the ATOL trust management structures. The Department for Transport is alive to the fact that because we have seen significant changes to the travel industry—not only since 1973, but since 2004, as well as more recently—it might be necessary to enter into separate trust arrangements for the greater business model, such as linked travel arrangements, to give greater transparency to businesses and consumers. It might be necessary to introduce a new form of qualifying trust to ensure that the ATOL trust will still protect consumers in the all-important area of flight accommodation. The Bill allows the flexibility under trust arrangements so that we can increase funding and ensure that ATOL is adequately funded as time goes on.

Clause 3 addresses a slightly different point: the ability of the CAA—the House will realise that the authority is responsible for running the ATOL scheme—to require and request information from airlines selling ATOL-registrable products within the UK and more widely. Under the Bill, an important change would apply to airlines that have an air service operator’s licence from another EU member state and therefore would not need any of the licences that have been granted by the Civil Aviation Act 1982.

The House will be delighted that this is a short Bill, containing only four clauses. I have needed to deal with only three, so I do not need to go through the other one—I am sure everyone is delighted. [Interruption.] The Bill is short in terms of clauses, as the House will realise.