Holiday protection Your holiday at risk

Don't end up worrying that you won't have a flight home at the end of your holiday

Tour operators often mess about with your flight timings, choice of hotel, or even shuffle you off to a different resort – but at least you could be fairly confident you’d get home or get your money back if your tour operator went bust.

Until recently, that is.

So what has changed?

Put simply, you can no longer assume your holiday is financially protected. The problem is that the travel industry and consumers’ booking habits are changing, but the protection systems aren’t keeping track.

Every package that includes a flight should be covered by an Air Travel Organiser’s Licence (ATOL) which requires tour operators to levy a £2.50 passenger charge on all ATOL booked holidays. The Civil Aviation Authority (CAA) then collects the £2.50 passenger charge on behalf of the Air Travel Trust Fund (ATTF).

The statutory ATOL bonding scheme was far from watertight, but it protected most holidaymakers fairly effectively. That said, in 1997 98% of holiday travellers were protected by ATOL, but by 2006 this had dropped to just 61%.

This is because there has been a revolution in the way we book holidays in the last few years.

Many people now put together independently arranged DIY holidays rather than buy tour operator packages. It’s simple: visit a no-frills airline’s website, find a cheap flight, then link through to hotels, press the confirm button, job done.

If you’re less confident or prefer more advice, a travel agent will sell you the various parts – flights, hotels and other services such as transfers and car hire.

Should I be wary of booking my flight and hotel separately?

DIY holidays may be easy, flexible and made-to-measure, but by offering and selling separate holiday components, a travel agent can neatly escape the requirement to provide ATOL protection.

The ABTA logo is no longer a cast-iron guarantee you'll be refunded if your agent goes bust

Unfortunately, in 2006 ABTA, The Travel Association and the CAA came to blows over the definition of a ‘package’.

The CAA said that travel agents who were selling DIY holidays that included a flight needed to pay for an ATOL.

ABTA disagreed, they took it to court, ABTA claimed victory, but the overall result is a confusing mess that will keep lawyers busy and make the business of buying a holiday more of a headache for consumers.

The worry is that some tour operators may sell holiday components separately rather than as a package and avoid providing financial protection to their customers. They can sidestep liability for poor standards and consumer safety in one neat move.

If this were to happen, it’s not just your financial protection that suffers: if there’s a problem with the standard of accommodation or you’re injured – or worse – in a hotel that’s part of a package, the general rule under the Package Travel Regulations is that the tour op is responsible.

But book the holiday independently and you may end up having to take legal action against a hotel owner based in another country.

Aren’t the odds of a holiday company going bust remote?

Not as remote as you may think. XL Leisure collapsed on September 12, 2008 leaving 85,000 holidaymakers stranded overseas. An estimated 200,000 people with advance bookings were also adversely affected prompting the CAA to admit that  the XL collapse was 'unprecedented' as it was the biggest tour operator ever to go bust.

In December 2006 HCCT Holidays went bust, affecting around 40,000 people. Luckily, the company had a £7 million ATOL bond which was used to rescue those abroad, and to refund others with advance bookings.

And don’t forget that flights bought direct from airlines or through their agents are not ATOL protected, and no-frills carriers are particularly prone to going bust – the collapse of Irish-owned EUJet in July 2005 left 12,000 passengers abroad and 27,000 yet to travel.

Over 60 airlines have gone bust worldwide since November 2008.