The CAA on Monday (20 February) issued the accounts for the ATTF for the year to 31 March 2021, during which 34 Atol holders failed – the highest number in a single year since the introduction of the Atol protection contribution (APC) in 2008/09. A year earlier, there were just eight failures of Atol holders.
Notable Atol failures in the year to 31 March 2021 included STA Travel, APS-Select (trading as VIP Ski) and Alpine Elements. Of the 34 failures, there were four that each placed an estimated call on the ATTF of more than £1 million. The total estimated call on the ATTF for the 2020/21 year was £11.4 million.
Owing to the impact of Covid, income from APCs – the £2.50 levied on all Atol-protected seats – fell to a third of pre-pandemic levels, from £65 million in the year to the end of March 2020 to £20 million in the year to the end of March 2021, although this picture has since improved.
By the date of signing of the accounts (17 February), the APC outlook – said the ATT – has since improved "over the second half of the pandemic" to "roughly two-thirds of pre-pandemic levels".
The ATTF ended its 2020/21 financial year with total assets of £46.6 million and liabilities of £18.2 million, leaving it with net assets of around £28.4 million. Cash reserves stand at £108 million, and it also has access, if required, to £75 million in commercial borrowing facilities.
As a result, its trustees have concluded the ATTF has "adequate resources" on which to draw "to continue in operational existence for the foreseeable future", with that period being at least a year.
Concerns, though, have been raised over the longer-term impact of Covid on the package market. "There is still uncertainty about how long it will take the sector to recover, and how this might impact consumer demand for Atol-protected holidays," said the ATT in its report.
"This, in turn, creates significant uncertainty over the income and expenditure of the trust, in terms of reduced APC income and an increase in both the number and aggregate cost of Atol failures."
However, while the ATT admits the resources at its disposal "may be insufficient to meet the costs of a large or multiple failures", its trustees said it was their expectation the government would "provide additional financial support to the ATT as necessary".
In its report, the ATT acknowledged the timing of the arrival of Covid was fortuitous in some ways, with the majority of affected Atol holders having only taken deposits rather than full balances from consumers. This meant the majority of these failures "did not have a material impact on the trust".
The ATTF was heavily depleted heading into the pandemic following the September 2019 collapse of Thomas Cook, which is estimated to have placed a call on the fund running to almost £500 million.
