Financial security - ATOL Protection
The demise of XL Airlines, turbulence in the financial markets and general media hype has led to some uncertainty among the public in recent weeks.
We've noticed an increasing number of questions about financial protection, bonding, ABTA etc, following a spate of TV, radio and newspaper articles and warnings about booking holidays with 'safe' companies.
So, if you're feeling a bit unsure about how protected you are on our holidays and need some reassurance please read on:
1. Are we members of ABTA?
No - and this is very deliberate. We do not intend to become members of ABTA because it really isn't relevant to us. Here's why...
ABTA stands for the 'Association of British Travel Agents' and we are not a travel agent. It is merely a trade association, one of several organisations (like the Passenger Shipping Association) and is a kind of club for members who have things in common. ABTA is mainly a club for retail Travel Agents, rather than Tour Operators, so it really doesn't apply to us, or our style of operation.
ABTA did a fantastic PR job back in the seventies and eighties (and continues to do so) in convincing the public that you must book with an ABTA travel agent to ensure your money is safe. However, there are other much better ways of providing financial security. Namely, having a CAA license.
2. What is CAA ATOL license?
What is far more relevant in terms of financial security (because it is a legal requirement, rather than just leaving it to companies to decide to join a trade association voluntarily) is that we hold an Air Tour Operators License (ATOL) issued by the CAA (Civil Aviation Authority).
Families, Dive and Wildlife (and therefore Walks, Equine, Schools) all hold ATOL licenses. (incidentally, as well as this, we are also applying for a new license for Chameleon Worldwide Ltd, though this may not be processed until October).
The CAA (Civil Aviation Authority) is the closest thing there is to a government licensing scheme. The CAA issues licenses to qualifying tour operators and also requires either a bond (an amount of cash set aside) or a price per passenger to be paid for every flight inclusive holiday sold. This is tightly controlled and regulated by the CAA. There are very strict rules involved in acquiring and retaining an ATOL license.
If a tour operator were to go out of business for any reason, the Civil Aviation Authority refunds any monies paid by a customer. And if a client were already overseas in the event of the failure of a travel company, they will arrange for clients to finish their holiday and then fly them home.
What is causing confusion at the moment is a loophole which allows some companies (mainly airlines) to trade without an ATOL license. This is because the CAA set their rules up long before airlines sold directly to consumers via the internet. Unfortunately the law hasn't changed quickly enough and airlines get away without having to meet the strict financial criteria imposed on operators like us, because they don't need a license. The travel industry has been campaigning for years to try to close this loop-hole, but to no avail. Maybe the crisis surrounding XL will cause the government to re-think this. I hope so.
3. How safe is our company in the current climate?
The nature of our tour operating business is comparatively low risk. In almost all cases, to create our holidays and tour packages, we use scheduled airlines, as opposed to charter airlines. This means we don't have to pay for airline seats up front (and then have to sell them in order to recoup our money). We occasionally pay a minimal deposit on a small number of seats, which we then cost into our tours, along with reserved accommodation and/or activities and excursions, to create a package.
Also, we don't have large contracts with suppliers which require payment in advance -we only pay for what we have sold, and we only pay suppliers after we've been paid for those services. Operating in this low risk way means we are unlikely to suffer like some other operators who have to risk large amounts of cash up front.
Our group has been in business for over 17 years. We know the business well and don't take risks.
Mark Wright
19 Sep 2008