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News & Advice

Consumer protection: Be safe not sorry

Have you booked your holiday online? Beware, it may not be protected. Ian Taylor reports

Unbeknown to the millions who are flying away this weekend, the travel industry is in turmoil over an issue that might suddenly prove close to their hearts - consumer protection.

Buy a holiday, or a flight and a room, and if a company involved goes bust you would hope to get your money back. And if you're away when it happens, or if there is a disaster, you would hope to be flown home. For the past 30 years, that is generally what has happened. But for increasing numbers of holidaymakers today, it would not.

The explosion in online booking and low-cost flights is having a side effect: more than 11 million Britons will buy foreign holidays this summer without consumer protection. If something goes wrong, they will be on their own. And because the numbers travelling unprotected are growing, the system which offers a guarantee to everyone else is crumbling.

When EUjet, the Kent-based airline, ceased trading last July it left 12,000 people stranded abroad and 27,000 with worthless tickets. Only the 130 who had bought a flight as part of a package holiday completed their trip or were given a refund. The Civil Aviation Authority (CAA) found that two-thirds thought their purchase was protected when it was not. Those abroad paid between £50 and £300 to get home. Those buying a package benefited from the Atol (Air Travel Organiser's Licence) system, overseen by the CAA.

Licensed travel firms lodge bonds with the CAA to cover refunds and repatriation costs in the event of a failure. A supplementary fund, the Air Travel Trust, provides back-up if a bond proves insufficient - although this is seriously in debt and could not cover a major bankruptcy.

So if an advert, brochure or website displays the Atol logo, you're covered. This is no small thing. Holidays are often bought months in advance and can involve more than one airline, hotel, car hire, excursion company and so on. An Atol-protected purchase covers you if there is a problem at any of them.

You can also expect to be looked after if a hurricane strikes or a bomb explodes. When hurricane Wilma hit Cancun last October, Airtours flew its package-holiday customers to the Dominican Republic to continue their holiday. Passengers with flight-only tickets had to fend for themselves.

The Foreign Office flew some independent travellers to Dallas for safety. But they had to make their own way home and, without insurance, face charges to cover the Foreign Office's costs.

An Atol works out at £3 to £4 per passenger. It's one of the costs cut out by many online companies so they can offer cheaper deals. Organise a holiday yourself by buying a flight on one site, a room on another, a car at a third, or make these purchases via links on a single site, and your purchases will be unprotected. Often you will be buying from unidentified sub-contractors.

A CAA attempt to extend the Atol system to plug this growing gap was rejected following a judicial review in January. Major tour operators, led by Thomson and Thomas Cook, are threatening to pull out of the scheme, while the CAA is consulting on an alternative, cheaper plan which would add a charge to holiday prices.

In the mean time, the travel industry awaits a high-profile collapse. Noel Josephides, director of the Association of Independent Tour Operators, blamed the press for embracing DIY holidays "without informing readers of the risks". He added: "I don't want to read the headlines when customers discover there is no cover."

Simon Bunce, head of legal affairs at the Association of British Travel Agents, said: "The potential of a large failure is growing." Richard Jackson, director of the CAA's consumer protection group, agreed, adding: "A big failure would help put the issue in front of ministers."

Where does that leave you? Buy a holiday from a traditional tour operator - online, over the phone or through a travel agent - and you're covered. Buy a holiday put together by a travel agent and you probably will be covered, but should ask. Buy online from one or more firms and, unless you see the Atol logo in each case, you probably won't be. Don't rely ontravel insurance - many policies will not cover you, so do study the small print.