The ATOL Scheme is a statutory based system covering most travel providers who sell flights, a flight together with accommodation or car hire or package holidays containing flight on their own behalf.
The ATOL regulations require such travel providers to hold a licence and the Civil Aviation Authority (CAA) is responsible for implementation and enforcement of the scheme. Its purpose is to protect the public from losing money or being stranded abroad because the travel provider that they have booked to travel with fails.
The Air Travel Trust Fund (ATTF) meets ATOL covered claims for refunds from, or repatriation costs, customers of ATOL holders if an ATOL holder fails. The primary funding for the ATTF is from the ATOL Protection Contribution (APC) that is payable by ATOL holders for each of their booked passengers for a flight only, a flight pus accommodation or car hire or a flight inclusive package. This requirement is established in the ATT Regulations. The CAA acts as an agent of the Air Travel Trust (ATT) in relation to the APC in accordance with the terms of those Regulations, and, when administering repatriations and refunds, in accordance with the terms of the Trust Deed and the ATT Payment Policy as agreed in the CAA/ATT agreement.
Previously this funding was achieved through bonds. Now only certain ATOL holders who meet specific criteria are required to provide a bind in favour of the ATT in addition to their statutory obligation to pay the APC. The proceeds of that bond would be used first in the event of the ATOL holder’s failure prior to the general ATTF being used.
Licences are valid for a period of no more than one year to either 31 March or 30 September (which is mainly determined by the ATOL holder’s financial year end). A licence limit is placed on each ATOL in terms of licensable passenger numbers and licensable revenue, based on a departure basis and by category of business.