Fee to protect holidaymakers could rise in 2010

The £1 ATOL to protect travellers on package holidays could increase to £5 next year.

Travel Insurance News - 12/02/2009

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The £1 levy that is currently paid by travel operators to protect the holidays of passengers in the event of a company’s failure is expected to rise next year, to as much as £5, even in the face of major opposition from leading companies in the UK travel industry.

Travel operators pay the ATOL Protection Contribution - the £1 fee – on all bookings, as a contribution to the cost of underwriting the financial protection for travellers on holiday packages. The ATOL fee is expected to increase due to the high costs incurred when XL collapsed and thousands of passengers were due refunds or needed to be repatriated.

More than 250,000 travellers were affected by the sudden collapse of XL Leisure, and 85,000 needed to be repatriated. The company’s bond of £42 million was insufficient to cover the total costs related to the failure, which reached nearly £80 million.

The Civil Aviation Authority (CAA) is denying reports that there is not sufficient money in the Air Travel Trust Fund to cover another operator failure. A CAA spokesman is also saying that reports indicating Barclays Bank refused to extend its £60 million overdraft are untrue.

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