Dream World Travel (Atol 9398) failed late last month (26 July); it was licensed to sell around 4,500 Atol-protected seats.

After assessing booking data supplied by the London-based business, the CAA said the claims process had been held up due to "data anomalies".

"Unfortunately, in the case of Dream World Travel, there have been data anomalies meaning there will be a delay in opening the claims process for anyone who booked an Atol protected trip," said the CAA.

Dream World turned over £36.1 million in the 12 months to 30 June 2020. This fell to less than £6 million in the 12 months that followed amid the onset of Covid.

In an update issued on Monday, the CAA reiterated only flights sold by Dream World where a valid Atol certificate was issued would carry Atol protection.

"These were typically for flights secured with just a deposit (rather than payment of the full cost of the flight) or flights paid in full where a flight ticket was not issued immediately, but an Atol certificate was issued," said the CAA.

The business sold Atol-protected flight-only seats, as well as unprotected seats through its Iata licence as agent for the airline operating the flight.

Andy Cohen, the CAA’s Atol spokesperson, urged affected customers to check their paperwork for an Atol certificate and to look for the Atol logo, Dream World’s Atol number and a "flight-only" note in the bottom right-hand corner.

“Please note that we can only accept claims for cancelled Atol protected trips," said Cohen. "Unfortunately, this means that if you booked an unprotected flight, you cannot make an Atol claim and should contact the airline.”

The time limit for making Atol claims is one-year – 25 July 2023.

Anyone who is due to travel on a flight ticket or e-ticket issued by Dream World are advised to check with their airline whether the ticket is valid. If it is, they should be able to travel. If not, passengers are advised to have this confirmed in writing to assist with the claims process.

Travellers who paid by credit card can make a claim to their card issuer under Section 75 of the Consumer Credit Act 1974, a so-called "chargeback".