Many small businesses could fail if proposed Atol reforms are implemented, a leading industry accountant has told the CAA.
Jonathan Wall, chief executive of accountants Elman Wall, said proposals for mandatory segregation of customer monies to protect consumers were a reaction to the collapses of Monarch and Thomas Cook. The two brands accounted for 93% of customers affected by failures between 2014 and 2019 and Wall said this did not represent the industry as a whole.
“I would urge the CAA to be cautious about making too many substantive changes to a system that largely functions effectively as a result of the mismanagement of two giants who bear no resemblance to most licence holders,” he said.
“A large number of well-managed, healthy tour operators could risk going under due to the negative impact it would have on cashflow.”
He added the proposals “could have a hugely negative impact on many principled and well-run businesses”.
Wall called for an extended period for businesses hit by Covid to recover and build a cash buffer to enable them to comply with any mandatory segregation.
He also urged Atol-holders to be allowed to protect consumers via bonding or an insurance-based model. However, he said suppliers needed to align with any trust models employed.
“If consumer funds are held in escrow or trust until a holiday has completed, but suppliers, who would typically be due 70-85% of the funds held, require payment in advance of commencement of travel, the numbers won’t stack up and tour operators will face an ever-increasing cash requirement to fund this gap as their businesses grow.”
Wall also called for airlines to be brought into the Atol scheme, saying it was “difficult to comprehend that there is consumer protection in place for the sale of holidays, but not for the direct sale of airline seats”.
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