Sources told The Sunday Telegraph that plans to offer a cash bailout are in the pipeline as the public become frustrated with credit notes instead of refunds.
The plans include a guarantee from government that Atol-protected credit notes from agents will be protected if the supplier collapses.
Proposals are reportedly being finalised by transport secretary Grant Shapps and secretary of state for business, energy and industrial strategy (Beis) Alok Sharma, after Andy Cohen, head of Atol, green-lit the idea.
This comes as Abta launches a campaign calling for changes to Package Travel Regulations (PTRs), which include an extension to the 14-day refund rule in the face of mass cancellations.
