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ATOL in massive debt - is it really safe?

The current Thompson ads promote confidence by explaining they are protected by "government backed ATOL". What they don't say is ATOL is big in the red - has the government given an unconditional guarentee to back it? What if one or more big players go to the wall?

The unthinkable has started happening to banks so why should it not extend to the travel /insurance businesses ?

Please, anyone booking, please consider doing it on a credit card to get a bit more protection.

Comments

  • r18rws
    r18rws Posts: 162 Forumite
    Its been in the red before and pulled through. Government backed is about as safe as you can get in current climate?
  • After the total XL fiasco, I have vowed to only book holidays and flights with my credit card from now on.
  • I only ever book with my credit card. I may have to pay extra to use my credit card, but at least I know that if the cost is more than £100 visa will come to my rescue.

    It's not worth taking a risk, especially these days.
  • bagand96
    bagand96 Posts: 6,308 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    ATOL is run by the Civil Aviation Authority (CAA) who are the Government body that regulate all things aviation; so I imagine its as safe as anything, its government run.

    As another poster said, its been in the red before; and it is not at all surprising is it is in the red now after the XL collapse. When an ATOL holiday is booked, the tour operator/travel agent has to pay a nominal fee to ATOL. All this money goes into the ATOL fund, which over time grows. When a company goes to the wall money from the fund is used to compensate its customers. But the fund is continually being added to every time an ATOL licensed tour operator/agent takes a booking.

    The problem has come because XL was such a big company, in fact an unprecedented failure. Must be a case of the funds in ATOL do not equal the liabilites of XL. So ATOL fund goes in the red, but over the fund will again grow. If another big operator (we only really have two huge players left!) went to the wall then there may be a problem, but it is a government backed/ran scheme at the end of the day, I imagine they'd have to step in.

    The XL failure has been a huge strain on ATOL, but its not surprising considering the scale of XL. And also not helped by the fact that it would appear some agents have been in breach of the law in the way they sold holidays. And add to that the confusion of other travel agents not processing claims properly, credit card companies not standing up to their liabilities.... I think there will be lessons learned after this.

    Its not been pretty but FWIW I still think ATOL protection is worth it. Credit card companies can refund monies paid, but if your travel agent/tour operator/charter airline goes bankrupt while you're away, ATOL is worth its weight in gold, they executed one of the biggest airlifts ever in September at no cost to any passengers.

    Out of interest OP, where did you hear about ATOL being in the red (I am not questioning you at all, or denying it was in the red, just interested)
  • r18rws
    r18rws Posts: 162 Forumite
    Nice post. CAA will pull through and allthough slow, and its a bad time with all the current climate issues, the CAA/ATOL scheme has worked and will work again.
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