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Do Travel Agents Need to Be Bonded?

The hot topic in the travel industry is, “Do travel agents need to be bonded?”. In short there is a very simple answer to this – No. Any travel business, tour operator or travel agent does not need to be bonded. Bonding is purely a vehicle to ensure Package Travel Regulation compliance.

When a travel agent or travel firm is selling more than one element and creating a package then there is a legal requirement to be Package Travel Regulation Compliant.

The Package Travel Regulations were updated on July 1st 2018 and now include linked travel arrangements.  In essence the Package Travel Regulations are in place to absolutely protect consumer funds and are applicable whether you are selling domestic or International travel, ground based or with flights.

The Definition of a Package for Package Travel Regulations

A package is defined by selling, or offering to sell, at least two of the following elements at an inclusive price:  accommodation, transport and other tourist services not ancillary to transport or accommodation and accounting to a significant proportion of the package.

Package Travel Regulations apply to both ground based and flight inclusive holidays. Packages including flights would simply require an ATOL as well.

How To Be Package Travel Regulation Compliant

The government has outlined three acceptable routes for travel agents to ensure compliance.

  1. Joining an independent trust account solution, such as Protected Trust Services.
  2. Financial Failure Insurance – an insurance that is generally paid on a per passenger basis.
  3. Bonding – having a bond in place in correlation with the size of your travel firm. Bonds tend to start from £50k and as such is an incredibly expensive option.

Therefore, bonding is purely a vehicle to adhere to Package Travel Regulation compliance. Bonding is not a legal requirement and for many the independent trust account is the favoured option.

The independent trust solution is the most scalable and affordable option for many travel companies.

The Chairman of the leading UK travel agency, Trailfinders, Mike Gooley, most recently discussed in Travel Weekly that the trust account is the only acceptable route forward in his opinion. “The travel industry has been more fraught with constant financial failure than any other enterprise and this has resulted in not just loss of money, but untold misery.

“The solution is so blindingly simple: the mandatory operation of a trust fund is to ring-fence pipeline funds and prevent their use for any other purpose than that intended.”

In essence, there are different vehicles to ensure Package Travel Regulations compliance and bonding is purely an option. Each vehicle is available to ensure that a suitable fit is available for every travel business. So, in conclusion, bonding is not required but package travel regulation compliance is.

PTS are pleased to offer one of the most cost effective solutions to you and your travel business in the industry. If this sounds interesting to you, please call 020 7190 9988 to discuss your business requirements, or send us an email to ask@protectedtrustservices.com