Matt Gatenby, senior partner at Travlaw, told the Abta Travel Law Seminar that the number of Atol holders was being “squeezed”, as some operators opted to exclude flights from their packages.

The CAA has yet to reveal its final plans for reforming the Atol scheme, which covers flight-inclusive holiday packages. The new system is due to start being introduced from April 2024, although there will be a transition period for Atol holders.

Gatenby said he expected a continuation of the trend for more travel companies not to include flights and thus stay out of the Atol regulations.

“This is something acknowledged by the CAA as a potential risk of reform in this direction,” he added. “You could see less and less companies do it [having an Atol] and see it all in the hands of a small number of companies.

“There will be less companies doing it but the companies doing it will be more resilient. Does this mean less consumer choice? Is that a price worth paying?”

Another travel lawyer Farina Azam, partner at Fox Williams, gave an update on consumer protection for non-air packages, which falls under the Package Travel Regulations (PTRs), including the latest on the bond and financial failure insurance markets post-Covid.

“The bond market is significantly stronger than it was during and immediately after the pandemic,” she said. “But it’s nowhere near the market we had pre-pandemic.

“Financial failure insurance policies are now more readily available but the premiums are much higher than pre-pandemic – 100% to 150% higher.”

Azam added that potential new entrants to both the bond and insurance markets seemed to be waiting for the outcome of the Atol reform process before launching into the market.

She predicted that planned reforms of the PTRs by the government were “likely to allow more of a mix and match approach” to consumer production of non-flight holidays.

The industry’s hopes that the government could combine flight-inclusive Atol-protected sales and non-flight packages under a single scheme seemed to be dashed by a representative of the Department for Business and Trade earlier in the seminar.