p12-13 WTM analysis nov21 19/11/08 21:57 Page 12
news wtm 2008 atol debate
ttglive.com
World Travel Market • November 10-13 • ExCeL, London
Forget the X Factor, it’s the
The size of the total bill for payouts to XL Leisure claimants
will do much to determine the extent to which APC will have
“APC was meant to
to increase, a seminar at WTM heard. Lee Hayhurst reports
be the great hope
of the protection
T
he demise of the XL Leisure Group
What is APC?
is expected to leave the CAA with
industry...but at £1
no reserves and could force the Atol The Atol Protection Contribution is a £1 per
it will not survive”
Protection Contribution to be raised to person levy introduced in April this year. It
as much as £5 to save the government scheme. replaced bonding for most Atol firms more
The looming recession and the XL failure than four years old. It was hoped this would
meant an increase in the cost of consumer replenish the indebted Air Travel Trust Fund,
protection was inevitable in 2009, said Alan that Atol draws on to pay for failure costs.
Bowen of AGB Associates.
Speaking at a session about consumer
protection run by the Association of Atol
Companies at WTM, he said the level of increase
could depend on what XL ends up costing
the CAA. This depends significantly on whether
it pays out to the large online agents, such as
Travel Republic and On The Beach, that claim
they were not selling packages.
There are 200,000 XL forward bookings to
be processed and the CAA will only have got
round to paying the relatively simple package Alan Bowen Andrew Burnham
claims of Kosmar and Travel City Direct by April.
Bowen said the £42 million bond XL had to APC there would not be a big failure until 2012
put up, due to its foreign ownership, was used at the earliest.
to repatriate its 80,000 customers, and all the “They [AIG] were the only insurers prepared
money collected under APC since April had gone. to put their heads above the parapet and offer
And, he claimed, it is thought the £60 million insurance. Only one insurance company, after
Barclays overdraft facility that was put in place months and months of searching, said ‘this is
to back up Atol when APC was brought in will not a risky business, how much would you like?’
also be spent. and the CAA plucked out a figure of £250 million.
With the Air Travel Trust Fund already “Once that’s gone, it’s gone. If we have
X Factor judge Dannii Minogue was
£20 million in the red, he claimed the CAA was another XL we are in deep trouble.”
a guest of Etihad at WTM last week
staring into a “huge black hole”.
“The coffers are empty; there is no money in An unwilling government But he doubted new transport minister Geoff
the bank,” said Bowen. Bowen warned it would be wrong to assume Hoon would signal a change in the government’s
“APC was meant to be the great hope of the the XL failure was primarily caused by the stance when he meets Thomas Cook and Tui
protection industry. Can the APC survive as it is? downturn and predicted travel had not yet Travel next month.
It cannot. At £1 it will not survive 2009. seen this recession’s big collapse. “There is no government will to do anything.
“There are going to be more failures, there He said, despite the positive noises coming The last time the government got almost to the
always are in a recession. To survive in its from Tui Travel and Thomas Cook about 2009, point of doing this, British Airways and its large
current form APC must go up.” there will be a reduction in bookings, meaning corporate clients, such as ICI, said why should
The CAA does have a £250 million insurance fewer £1 levies will be collected. they pay £1 to protect airlines that were likely
policy with struggling insurance giant AIG to Atol, under the APC, is not sustainable if the to go bust anyway,” Bowen said.
cover any catastrophic failure in the early years number of £1s collected drops considerably Bringing scheduled airlines into Atol would
of APC. below the current 25 million, Bowen believes. also probably require legislation to be passed
But Bowen said that was agreed on the back He said the only quick solution to this was a by parliament which would be time-consuming
of advice from accountants Ernst & Young, change of law to bring all airlines into the Atol and the government is likely to have more
which predicted that with the introduction of scheme, increasing APC revenue by £40m a year. pressing issues to deal with.
12 21.11.2008
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