Thursday, 3 February 2011

Booking through an airline website could still be risky

The Department for Transport is stretching the ATOL scheme to cover travel agents and websites which book flights and accommodation separately - up until now they have managed to sneak around the rules.
But airlines still aren't covered, unless they've actually set up a tour company. Why?
Way back in the distant past when the ATOL bonding system was created, the world of air travel was a much simpler place. We're in the early 1970s when most airlines were state-owned symbols of national prestige.
What that meant was that there was virtually no chance that the scheduled airline you were travelling on would go bust. So there was no need for a bonding scheme to provide you with protection.
Of course, the situation was quite different with tour operators and charters. They had expanded massively thanks to the boom in package holidays and were seen as the cowboy end of the business.
There really was a danger that your holiday company could fail and you would be left stranded with no means of getting back, unless you paid a lot of money.
That was how ATOL started out. Tour operators have to be ATOL bonded, which usually means depositing at least £40,000 with the scheme. £2.50 has to be paid in for each booking as well.
Forty years on, airlines have changed. There's less value put on national carriers. There are more no-frills airlines. And, most importantly, airlines can very definitely go bust.
In this situation, tour operators are complaining that today's expansion of ATOL doesn't go far enough, because the changes announced by the Department of Transport don't cover airlines in a couple of crucial respects.
The first is an old chestnut. If a holiday company was to book you on a scheduled airline, you would be protected. But if you booked direct and the airline folded, you would be in danger of being stranded without any help.
The second concerns the service airlines offer on their own websites for you to book accommodation and other holiday extras. You "click through" and book something for which the airline earns a commission. This is a hugely important additional stream of income for carriers and it's growing.
But click throughs from airline websites won't be covered by the expanded ATOL scheme. Tour operators say that's unfair and a danger to consumers.
Because airlines were not included in the original ATOL scheme all those years ago, new legislation would be needed to bring them in and that would take time, possibly years.
Incidentally, the European Commission is looking at the question of whether there should be a protection scheme for travellers who book themselves directly on scheduled airlines, as part of its review of the Package Travel Directive.
However, Brussels could spend a couple of years on this -- and the UK government might be inclined to wait and see what happens.

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