Businesses generally use vacation deposits as an essential part of financing their business. The Atol travel industry lifeboat was established in 1971 to respond to a business failure and loss of money.
Limiting customer liquidity, a common practice in other industries such as banking and gambling, would mean that businesses would not be able to use the money handed over when booking.
Companies that currently reapply for annual renewal will need to set up separate accounts, sources said. Businesses will be limited to a certain number of reservations based on the amount of money they agree to keep in trust.
Martin Alcock, director of Travel Trade Consultancy, said that while there were a lot of positives to segregating customer deposits, they were “not a panacea”. “They can be painful to set up, and they tie up a lot of money… A lot of travel companies won’t be able to afford them,” he said.
The plans also aim to address fears that the taxpayer-backed Atol system is not being adequately capitalized.
Labor MP Meg Hillier, chair of Parliament’s public accounts committee, said: ‘The flaws in the travel industry model have left consumers at the bottom of the ladder for too long. When a business goes bankrupt or a flight or vacation is canceled, consumers often struggle to get their hard-earned money back in a timely manner.
“A new model that protects consumers’ money is overdue. This will change the working model of many travel agencies, but provide much needed protection for consumers. The corporate collapse and Covid have highlighted what can go wrong. “
The CAA made no comment.
More about this article: Read More
This notice was published: 2020-09-19 19:00:00