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Air Travel Organisers’ Licensing

My hon. Friend makes an important point. One issue raised during our inquiry was that the European travel package regulations are being renegotiated, which may take some time. That makes it particularly important that our Government, through the Department for Transport or whatever part of the Government is thought to be correct, advocate during the long-drawn-out discussions on that package, what is correct for UK consumers. It is an ongoing process, and it would be helpful to know what the Department is pursuing in this area at European level, what stage those discussions have reached, and how it will be involved as they proceed and before the extensive European travel package regulations are finalised.

The charge of £2.50 per passenger to pay for ATOL is unfair, because it is not linked to the value of the holiday booking or any assessment of risk. Someone booking a cheap package deal with an established operator pays the same for protection as someone buying a luxury trip to a far-flung country with a niche provider. That is unfair, and the situation would be even worse if flight-only bookings were included, because the ATOL charge could be a high proportion of the cost of a cheap flight. The Government have agreed to re-evaluate the level and the basis of the charge. Will the Minister say what progress is being made with the review?

On the long-term options for ATOL, we considered whether it should be scrapped altogether and replaced with private insurance. We concluded that that was not possible. Few insurance policies are available to provide the same level of protection, and the Government cannot avoid their responsibility swiftly to repatriate people stranded abroad because a travel firm has failed. The EU package travel directive requires the UK to provide a financial protection scheme for holidaymakers.

Nevertheless, there is scope for further reform, particularly when the scheme’s deficit has been cleared. In the Committee’s view, a reformed scheme must distinguish clearly between financial protection for consumers, which might sometimes be covered by private insurance, and repatriation, which is unavoidably an issue for the

Government. The scheme should be industry funded, not reliant on Government guarantees as at present, and perhaps it should be managed by the industry. Consumers should have a greater say in deciding what is covered, and there should be more research on what consumers want. There must be more clarity and more public information, so that consumers are clear about when they are covered and when they are not. The Committee would like the cost per booking to come down, and be proportionate to the price of the package. If that were done, much of the controversy about the scheme might fade away.

In recent years, the internet has enabled some people to bypass travel agents and tour operators, and to put together their own package holidays. The ATOL scheme has not kept pace with that development. It has run into financial difficulties, and there is now confusion about who is covered by the scheme and who is not. The Committee welcomes the Government’s steps for reform, but there is much more to be done. I look forward to hearing about further proposals for change.

The nature of the leisure industry and holiday bookings has changed. Travel protection needs to reflect those changes and consumers’ needs. The Department has started to address that, but a great deal more needs to be done, and I look forward to hearing from the Minister what steps are being taken, and what the Government’s plans are.