However, the pot stands at a healthy £139 million, the ATT disclosed on Wednesday (12 July), albeit with it still recovering from the collapse of Thomas Cook and the impact of earlier Covid-era failures.
The ATT pays out when bonds are insufficient to cover the cost of refunds and, if necessary, repatriation. The call on it in the 12 months from April 2021 to March 2022 compares to the £11.4 million the previous 12 months after Thomas Cook collapsed.
The biggest drain on the fund during 2021/22 was from diving specialist Blue O2, which ceased trading as an Atol holder, costing the ATT £754,000. It was immediately revived as Blue O Two under Scuba Tours Worldwide.
Twelve of the 15 collapses are expected to dip into the fund. The biggest in terms of passenger numbers, Truly Travel trading as Teletext Holidays, was a member of the Travel Trust Association and is not the responsibility of the ATT.
The ATT is topped up by the Atol Protection Contribution, currently £2.50pp. During 2021/22, this amounted to just over £37 million, with 14.83 million passengers contributing.
The report said: “The Trust Fund remained in surplus throughout the year and did not call on the borrowing facilities available to it.”
It added: “At the date of signing, the Trust’s resources primarily include £139 million of cash reserves, £75 million of commercial borrowing facilities and, to the extent that those resources may be insufficient to meet the costs of a large or multiple failures, the Trustees’ expectation is that His Majesty’s Government will provide additional financial support to the ATT as necessary.”
The report said the number of failures had “reduced significantly this year” as the impact of the pandemic receded.
“As was the case last year, no passengers of failed Atol holders required repatriation, although around 11,000 customers with bookings to travel at a later date were due refunds for amounts paid in respect of their bookings.”
The report said the CAA has been working on improving repatriation procedures widely regarded as too costly.
“The work included the negotiation of improved contracts with various airlines that could be used as a source of replacement flying, contracting with additional airlines, and entering into similar arrangements with various suppliers of ground handling and support services,” it said.
’Booking profiles uncertain’
It warned the industry was not immune from economic headwinds despite buoyant sales.
“While many travel businesses have benefited from pent-up consumer demand, there is still a need to rebuild balance sheets and improve financial stability following the significant effects of Covid.
“The increased debt held by travel businesses, now in an elevated interest rate environment, plus other cost pressures such as wages, energy costs and other inflationary implications, even further combined with operational challenges such as recruitment, mean travel businesses will continue to face challenges in managing their finances and operations over the short and medium term.
“Bookings during the traditional ‘peak’ periods at the start of the year highlighted that, while consumer confidence is in negative territory albeit improving, holiday spend continues to be the lead non-discretionary category of spend prioritised by customers.
“That said, booking profiles remain uncertain compared to pre-Covid and the pace at which inflation falls, the extent of continued tightening of monetary policy and other consumer pressures all combine to create uncertainty as to whether demand will be sustained at current levels.”
