Spain-based travel agent eDreams and some other EU travel agents will no longer be allowed to offer customers Atol protection from the end of this month.
Under new rules, travel agents based in the European Economic Area (EEA) can only offer financial protection from their home country. Companies, such as eDreams, whose licence expires in September, will no longer be allowed to take part in the scheme.
Atol protects holidaymakers in the event of the financial failure of a holiday provider, ensuring that they are repatriated if overseas or compensated if their holiday is cancelled. All EEA countries have to offer similar schemes, but there have been concerns in the past as to the level of protection provided in some regions of Europe.
The Civil Aviation Authority (CAA) told us, 'the rules require each country to ensure that their arrangements are sufficient to provide effective protection.'
This has not always been the case, as was illustrated by the failure of budget travel agent Lowcostholidays in 2016. Despite the fact that the majority of its staff were based in the UK, it moved its official headquarters to Mallorca in 2015.
As Spain's equivalent of Atol is administered by the country's regions, it then joined the Balearic Islands' scheme. When it went into liquidation in July 2016 the 137,000 people affected received nothing from the Balearic's scheme.
The CAA has advised people booking a holiday that is not Atol protected, 'to be sure that you understand the protection offered as part of it, as some countries' schemes may offer different levels of protection.'
However, it's difficult to see how people can do this in practice.eDreams has always been part of the Spanish financial protection scheme, formerly in Catalonia and now in Madrid where it moved last year. However, last year it also acquired Atol protection to provide UK consumers with additional reassurance.
It told us: 'eDreams UK was granted Atol protection in September last year. However, as a result of these rules changes, it is no longer possible for us to continue to be covered by Atol. The good news is that our customers won't be affected, as eDreams UK is also covered by Spain's national travel insurance scheme, which protects millions of holidaymakers worldwide every year and meets the high levels of protection required by EU law.'
Customers can also book holidays through the parent company, eDreams Odigeo's UK brand, Opodo. In theory, however, holidays booked with eDreams itself should now be slightly cheaper. Firms that offer Atol protection have to pay £2.50 per passenger into the Civil Aviation Authority's Air Travel Trust fund. The money from the fund is used to repatriate or compensate passengers in the event of a financial failure.
Companies outside of the EEA are still required to have Atol protection. This includes Expedia, based in the US, Ryanair Holidays, run for Ryanair by a company based in Switzerland and Lastminute.com, also based in Switzerland.
The company that runs Easyjet Holidays, Hotelopia, is based in Spain and, when its Atol certificate expires in March next year, it could be in the same situation as eDreams. However, Easyjet told us: 'we are working with our partner to have the necessary arrangements in place which will ensure that customers have the same levels of financial protection after March.'
If Brexit goes ahead as planned in March 2019, it is unclear whether European firms will be able to continue selling holidays in the UK without Atol protection. This will need to be resolved in any Brexit deal between the UK and the EU.