Types Of ATOL To Help Protect Your Travel Business

Types Of ATOL To Help Protect Your Travel Business

The travel industry has always looked to protect consumer money for holidays abroad, particularly for cases in which the providing travel business has failed. This has been a top priority for the industry since 1973, when the ATOL scheme was created. Most people are aware of the ATOL scheme itself, but few people – both  in and out of the travel business – are familiar with the different types of ATOL available. Today, we will address the various types of ATOL, and will help to determine which one you, as a travel business, should investigate.

What Is ATOL?

Let’s start with the basics. The Air Travel Organiser’s Licence (ATOL) is a scheme created by the Civil Aviation Authority (CAA) to protect consumer money in the case of a travel business failure. ATOL specifically protects consumers who have purchased package holidays (holidays with more than one element under one price) that include air travel, and some flight-only bookings. It only protects consumers who have purchased a package with an ATOL holder, and following their purchase, the consumer will receive an ATOL certificate to confirm this. It is required by law for a business selling air travel to possess an ATOL in one of four forms.

ATOLs are funded by the Air Travel Trust (ATT). This works through those travel companies that hold ATOLs contributing £2.50 per traveller to the fund, which is then used to refund, reimburse, or repatriate travellers when things go wrong.

What Is Not Protected By ATOL?

Though the ATOL Scheme currently protects around 20 million travellers a year, there are types of holidays where an ATOL cannot protect a consumer through refund, reimbursement, or repatriation. These include:

  • Linked Travel Arrangements, unless they include an ATOL protected element
  • Flight-only bookings where you receive a valid ticket in exchange for payment
  • Flight-only bookings made directly with a scheduled airline, or flights booked with airline ticket agents
  • Domestic holidays
  • Packages sold outside of the UK

When Do I Need an ATOL?

Your travel business will require an ATOL if you intend to sell flights within your packages. Additionally, for businesses that are only selling flights, you will require an ATOL if the consumer will not receive their flight tickets right away. It is required by law that you operate under an ATOL in these conditions, and that you provide consumers with an ATOL certificate when their package is paid for.

What Types Of ATOL Are Available?

There are several different types of ATOL licenses available, each with different limits and requirements. The various ATOL options that you may require, include:

  1. Standard ATOL – When you plan to carry more than 500 passengers per year.
  2. Small Business ATOL (SBA) – When you plan to sell less than 500 flights or holidays per year.
  3. ATOL to ATOL Trade Sales – When you plan to sell flights and packages to other ATOL holders.
  4. Franchise ATOL – Franchise ATOLs, like Protected Trust Services, can allow franchisees to sell up to 5000 flights or up to £5,000,000 turnover. PTS’ franchise ATOL is limited to 1,000 flights or £1,000,000 turnover per annum, but we do offer larger franchise ATOLs on a case by case basis.
  5. Accredited Bodies – In this instance, you must be a member of an accredited body that holds an ATOL. As part of their membership, you will be able to trade under their ATOL.

If you are an agent of an ATOL holder, you can either sell packages on behalf of the ATOL holder (such as Jet2), or sell  flights on behalf of the ATOL holder. By selling packages or flights provided by another business, you do not need your own ATOL. However, you must ensure that an ATOL certificate is issued to the customer on behalf of the ATOL holder immediately. Please also note that if you are an agent of an ATOL holder, you cannot add extra services to a package or flight purchase, unless it is protected by your own ATOL.

Requirements To Hold an ATOL

There are certain requirements that are common for all types of ATOL. Firstly, you will be required to take a fitness and competence test with the CAA. This will confirm that you understand the requirements of the ATOL scheme, and ensures that you meet the fit and proper person test. The CAA will conduct this by requesting data on the financial strength and resources of the business, by scrutinising the CVs of those in positions of responsibility within the applicant business, and by assessing the applicant’s businesses plans for the future. If the CAA decline your application to hold an ATOL, they will set out their reasons for doing so and give you the opportunity to appeal.

There will also be a financial criteria to meet. For Standard and Trade ATOLs, you will be required to meet the Standard ATOL financial criteria. For a Small Business ATOL, you must meet the Small Business ATOL financial criteria. For a Franchise ATOL, or to trade under an accredited body, the financial criteria will be set by the accredited body or franchise in alignment with CAA guidelines. A full breakdown of the financial criteria required for each type of ATOL, can be found in the CAA’s ATOL financial criteria document.

Standard ATOL

You should be looking at a Standard ATOL if you’re planning to carry more than 500 passengers per annum. In addition, bond requirements are applicable for year one. When applying directly to the CAA for a Standard ATOL, the requirements are as follows:

  • A bond level of 15% of licensable revenue (subject to a minimum of £50,000).
  • Pass a personal fitness and competence test, to ensure that you understand ATOL requirements and that you meet the standards for a fit and proper person.
  • Meet the Standard ATOL financial criteria.
  • Pay a £2,015 application fee, and a 12.64 pence variable per passenger charge.

Please note that the Protected Trust Services independent trust is recognised by the CAA as an alternative financial protection. As such, PTS members can apply for a Standard ATOL without needing to meet the bond requirement. This can make the Standard ATOL substantially cheaper to obtain, and our friendly team support our members through every step of the ATOL application process. There are also no trading restrictions with a Standard ATOL where there are with some others.

Small Business ATOL (SBA)

You should look into a Small Business ATOL if you’re planning to sell fewer than 500 flights or holiday packages per annum. The requirements for a Small Business ATOL are as follows:

  • A minimum £50,000 bond.
  • Pass a personal fitness and competence test, to ensure that you understand ATOL requirements and that you meet the standards for a fit and proper person.
  • Meet the Small Business ATOL financial criteria.
  • Pay a £1,189 application fee.
  • APC (ATOL Protection Contribution) is payable at a cost of £2.50 per licensable passenger booked. Small Business ATOL holders are required to make an APC deposit payment of £1,250, which is held until the licence is no longer valid.
  • Holders are required to supply reports of their ATOL sales. The frequency of this reporting ranges from monthly to quarterly, based on the level of licensed revenue authorised.

Please also be aware that Small Business ATOL holders are restricted to a maximum of 500 passengers and £1 million turnover per annum. If you exceed these limits, you will need to upgrade to an alternative form of ATOL.

Franchise ATOL

You should look into a Franchise ATOL if you are a member of an approved travel trade organisation (such as Protected Trust Services), and you plan to sell flights and package travel holidays. The requirements for a Franchise ATOL are as follows:

  • Pass a personal fitness and competence test, to ensure that you understand ATOL requirements and that you meet the standards for a fit and proper person.
  • Pay a £758 application fee if you plan to sell to under 1,001 passengers per annum, or a £2,015 application fee if you plan to sell to more than 1,000 passengers per annum. The more expensive ATOL is only available to PTS members on specific application.
  • Pay a 64 pence variable per passenger charge, only if you sell to over 1,000 passengers per annum.
  • You may be asked to meet certain financial criteria.

The Franchise ATOL is granted based on your membership with an approved franchise consumer protection scheme, such as Protected Trust Services. The franchisee will have entered an agreement with the Air Travel Trust, and a part of that agreement allows the CAA to grant ATOLs to the franchise members, following sufficient checks. There are also no bond requirements, as the franchisee provides the guarantees instead. However, the franchisee will typically ask the member to provide protection in other ways. As you are applying via a franchisee instead of directly, you must apply for this ATOL through the franchisee, as opposed to the CAA. The franchisee will converse with CAA to determine if you are a responsible choice.

Trade ATOL

You should investigate an ATOL to ATOL trade agreement if you sell flights or holiday packages to other ATOL holders. The requirements for obtaining a Trade ATOL are as follows:

  • You are only intending to sell to other ATOL holders.
  • Pass a personal fitness and competence test, to ensure that you understand ATOL requirements and that you meet the standards for a fit and proper person.
  • Meet the Standard ATOL financial criteria.
  • A minimum £10,000 bond.
  • Pay a £2,015 application fee, and a 12.64 pence variable per passenger charge.

Please note that this form of ATOL will restrict you to selling exclusively to other ATOL holders.

ATOL Via Accredited Bodies

Becoming a member of an accredited body is a little different to the other types of ATOL we’ve discussed here. The primary difference is that becoming a member does not give you your own ATOL, but allows you to trade under the accrediting body’s ATOL instead. There is no ATOL bond required, but you must meet the membership requirements of the accredited body, and you have to have joined as a member in order to trade under their ATOL.

How PTS Assist Your ATOL Application

PTS can assist you in acquiring your ATOL, allowing you to provide the flight services and packages you want. We are a trusted provider to an array of different travel business types, including tour operators, travel agents, experienced home workers and flight agents. We can provide you with the ability to trade under our franchise ATOL, as well as offering a range of other support and services to help protect and grow your travel business. PTS can also support our larger members in securing a Standard ATOL, and we also offer the facility to home worker travel agents to work under the PTS ATOL as a member of PTS. Most importantly, PTS have a number of experienced ATOL consultants on our team, who work to support our members. ATOL consultation is included in your PTS membership, so your expert support is included within your standard membership fee.

To find out more about how PTS can help you to acquire your ATOL, please visit our ATOL licenses page. Alternatively, for any further questions or queries, please contact our friendly team on 0207 190 9988, or via email to ask@protectedtrustservices.com. We will be delighted to help you.