The CAA is expected to issue its response to the more than 300 responses this month, with a second consultation expected later this summer.

Work on the scheme comes as the government looks to reform the UK’s package travel rules and the country’s competition landscape.

These changes are expected to be highly pro-consumer, while changes to the Atol scheme in the wake of the collapse of Monarch and Thomas Cook, as well as the Covid crisis, are expected to strengthen protection of consumer monies.

Here are my key takeaways from the Atol consultation so far.

1. The consultation covered four main areas. The most important were the proposals to reduce reliance on customer money and introduce risk-based pricing to the Atol protection contribution (APC). The additional proposals to change the procedures around amending agency agreements and increase the frequency of APC payments for small business Atol holders were pretty non-contentious.

2. Despite the consultation’s preamble and rhetoric, we believe the primary motivation for changing the Atol scheme is the parlous state of the Air Travel Trust Fund (the fund was severely depleted by the collapse of Thomas Cook).

3. The consultation set out a menu of different options for consideration. However, just like the menu in Betty’s Traditional Pie and Mash shop, none of the choices were particularly appetising.

4. Option A was very much the jellied eels of the menu. It set out a mandatory framework of either bonds or client money segregation that all Atol holders would have to comply with.

5. Option B set out a tailored framework. It would allow Atol holders to choose a blend of bonds and customer money segregation that would best suit their business model.

6. The CAA has been tight-lipped about which option they might require. CAA director Paul Smith may have given a clue in April, when he told an Aito event "there is not necessarily likely to be a one-size-fits-all approach”.

7. Option C set out the choice for APC. Either a fixed APC charge for all Atol holders (which would presumably be higher than the current £2.50 per passenger) or some kind of variable charge based on an Atol holder’s risk or holiday price.

8. Option D introduced the concept of an open-market solution. This would effectively privatise the protection of consumers by making a commercial insurance firm responsible for running the scheme. It would also bring an end to the need for the current Atol function, so we think it’s as unlikely as turkeys voting for Christmas.

9. We understand the CAA received an unprecedented number of responses to the proposals set out in the consultation but at this point, we still have far more questions than answers: we still don’t know how important stakeholders like insurers and merchant acquirers will react, what transition timescales will be allowed, what impact the proposals will have on travel agents, and what additional complexity will be imposed on what is already the most complex scheme of travel protection in the world.

10. We expect the CAA to release a summary of responses sometime in May 2022. Then there will be a second consultation later in 2022, which will narrow down the options and ask for final views.

Martin Alcock is director of the Travel Trade Consultancy, which helps travel businesses find solutions to complex regulatory, financial and strategic problems. You can read Martin’s original piece here.