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When does travel need financial protection?

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The Package Travel, Package Holidays and Package Tours Regulations 1992 and the Civil Aviation (Air Travel Organiser’s Regulations) 1995 require travel companies to provide security for the monies that consumers pay for certain types and combinations of travel arrangements booked with them and for consumers’ repatriation in the event of their insolvency. This means that in respect of all arrangements requiring protection, in the event of the travel company making the booking becoming insolvent, funds will be available to ensure that consumers are not left stranded abroad or will arrange to refund them money they have paid for an advance booking.

Broadly speaking, the effect of the above two pieces of legislation taken together mean that travel arrangements sold as a ‘Package’ require tour operator bonding whether or not they include a flight. Packages including a flight, and flights sold with accommodation or self-drive care hire (‘Flight Plus’) will require the seller to hold an Air Travel Organiser’s Licence as well as to carry financial protection.

What is a ‘Package’

A ‘Package’ exists if a consumer books a pre-arranged combination of at least two of the following components when sold or offered for sale at an inclusive price and when the service covers a period of more than twenty-four hours or includes overnight accommodation:-

(a) transport;
(b) accommodation;
(c) other tourist services not ancillary to transport or accommodation and accounting for a significant proportion of the package.

Package
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What is a ‘Flight Plus’?

If you sell a flight and accommodation or car hire “in connection” with the flight, requested on the same day, the day before or the day after, you will be a ‘Flight Plus Arranger’ and will need to hold an ATOL and financially protect either with an ATOL Bond or trust account, all elements of the sale (as well as any other tourist services sold at the same time). This is so whether you sell as an ‘agent’ in a transaction or as the ‘principal’ (the actual supplier of the services).

When do I need cover to sell a ‘Flight Only’?

If you sell a charter or a scheduled flight where a ticket isn’t issued straight away and you are not acting as an agent for an ATOL holder, you will need to hold an ATOL yourself and financially protect  either with an ATOL Bond or trust account, the monies paid for that flight.

Agent or Principal?

Even if you can be sure of what type of sales you are making, the contractual capacity in which you are making those sales is crucial in assessing whether or not they need to be financially protected. Are you selling arrangements as an agent for another supplier or as the supplier of those arrangements yourself (i.e. you are acting as a principal in the contract)? You may think you are acting as an agent when you’re actually taking on a principal status, which may create obligations on you to financially protect your sales.