Air Travel Organisers' Licensing
Encyclopedia
Air Travel Organisers' Licensing (ATOL) is a United Kingdom Civil Aviation Authority (CAA) scheme to protect people who have purchased package holiday
s and flights from a member tour operator
.
The majority of UK tour operators are required to hold an ATOL licence, without which they may not legally sell air travel. ATOL licenced firms will have had their business practices inspected by the CAA. An ATOL licensed tour operator must also obtain insurance bonds
from the CAA. The aim of this is to provide refunds to travellers affected by any event which causes the airline to be unable to provide travel for its customers, and to arrange for flights (in addition to accommodation and other items which may be included in a package holiday) to return home those who are still abroad at this time.
(ABTA) provided a degree of financial protection for air travellers. In 1970, the Federation of Tour Operators (FTO) (then the Tour Operators Study Group) introduced a bonding scheme whereby their members had to obtain bonds
to the value of 5% of their annual turnover
. In 1972, the ABTA followed suit.
group collapsed. It was the second largest tour operator at the time and its subsidiaries included Clarkson Holidays
. Clarksons Holidays held an ATOL licence and were therefore theoretically covered by their insurance bond. Unfortunately, although the 35,000 passengers stranded abroad were repatriated, there was insufficient funds for the 100,000 whose holidays had been paid in advance. This led to considerable media attention. A government fund called the Air Travel Trust has since been introduced to pay for any excess which is not covered by ATOL.
Package holiday
A package holiday or package tour consists of transport and accommodation advertised and sold together by a vendor known as a tour operator. Other services may be provided like a rental car, activities or outings during the holiday. Transport can be via charter airline to a foreign country...
s and flights from a member tour operator
Tour operator
A tour operator typically combines tour and travel components to create a holiday. The most common example of a tour operator's product would be a flight on a charter airline plus a transfer from the airport to a hotel and the services of a local representative, all for one price. Niche tour...
.
The majority of UK tour operators are required to hold an ATOL licence, without which they may not legally sell air travel. ATOL licenced firms will have had their business practices inspected by the CAA. An ATOL licensed tour operator must also obtain insurance bonds
Bond (finance)
In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest to use and/or to repay the principal at a later date, termed maturity...
from the CAA. The aim of this is to provide refunds to travellers affected by any event which causes the airline to be unable to provide travel for its customers, and to arrange for flights (in addition to accommodation and other items which may be included in a package holiday) to return home those who are still abroad at this time.
History
In the 1960s, voluntary organisations such as the Association of British Travel AgentsAssociation of British Travel Agents
-History:Previously known as Association of British Travel Agents, its name was changed on 1 July 2007 to ABTA, The Travel Association to reflect its wider representation of the travel industry.On 1 July 2008 it merged with the Federation of Tour Operators ....
(ABTA) provided a degree of financial protection for air travellers. In 1970, the Federation of Tour Operators (FTO) (then the Tour Operators Study Group) introduced a bonding scheme whereby their members had to obtain bonds
Bond (finance)
In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest to use and/or to repay the principal at a later date, termed maturity...
to the value of 5% of their annual turnover
Revenue
In business, revenue is income that a company receives from its normal business activities, usually from the sale of goods and services to customers. In many countries, such as the United Kingdom, revenue is referred to as turnover....
. In 1972, the ABTA followed suit.
Legal requirement
The Civil Aviation Act 1971 established the CAA. Covered under this act was the creation of the original ATOL Regulations. These mandated that all travel organisers, those tour operators whose primary mode of transport was air (but not airlines themselves), must hold a licence. These regulations came into effect in 1973.Early practice
In August 1974, the Court LineCourt Line
Court Line was a prominent British holiday charter airline during the early 1970s based at Luton Airport in Bedfordshire. It also provided bus services in Luton and surrounding areas....
group collapsed. It was the second largest tour operator at the time and its subsidiaries included Clarkson Holidays
Clarksons Travel Group
Clarksons Travel Group was a package tour operator in the UK during the 1960s and early 1970s. The company ran into financial difficulties and was taken over by its major supplier of air travel, Court Line...
. Clarksons Holidays held an ATOL licence and were therefore theoretically covered by their insurance bond. Unfortunately, although the 35,000 passengers stranded abroad were repatriated, there was insufficient funds for the 100,000 whose holidays had been paid in advance. This led to considerable media attention. A government fund called the Air Travel Trust has since been introduced to pay for any excess which is not covered by ATOL.