What would the UK’s exit from the European Union without a deal mean for ATOL holders?

Whether UK leaves the EU with a deal or not, ATOL will continue to be required for UK business’s UK sales, but the scope of seats that must be protected is likely to be different depending on whether there is a negotiated deal or not.

If there is a deal, there will be an implementation period lasting until at least December 2020 where existing regulations will continue unchanged. This means that ATOL will cover the scope of sales that it does now.

If there is no deal, and the UK leaves the European Economic Area (EEA) then the following changes are likely, depending on where your business is established.  The “EEA” consists of all European Union countries plus Norway, Iceland and Liechtenstein.

Package organisers established in the UK

Countries in the EEA would no longer be obliged to recognise ATOL protection for package sales made in their territory, and ATOL cannot cover new package bookings made in the EEA.  ATOL will continue to protect bookings that have already been made, but any further sales made into EEA countries will need to meet local requirements for insolvency protection.  Affected businesses will need to make their own arrangements in this regard.

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Businesses established in EEA countries other than the UK

Just like countries in the EEA, the UK would no longer be obliged to recognise the protection arrangements made by EEA businesses.  Bookings made after the implementation of a new legal framework would need to be covered under ATOL protection, so these businesses would need to apply for ATOLs.

The CAA is aware that the time available for such businesses to apply for and obtain an ATOL would be short, so we would consider transitional measures, as set out below.

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UK travel agents selling packages organised by EEA-established package organisers

It will no longer be possible to sell (in the UK) packages organised by EEA package organisers solely as an agent of that organiser.  UK travel agents selling the packages of EEA-established organisers would need either to ensure that the organiser held its own ATOL, or the agent itself would need to obtain an ATOL to cover those sales.

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Transitional measures immediately after the UK’s withdrawal

As regards EEA-established businesses selling into the UK, in the three months immediately after withdrawal we do not expect to actively pursue enforcement action against those firms which i) apply for an ATOL and make adequate progress towards obtaining it and ii) whose UK sales are covered by insolvency protection that meets the standards applicable to consumers in their own country.

As regards UK-established businesses selling packages into EEA countries, the CAA is NOT contemplating transitional measures.  The limitation here arises because the UK would no longer be a member of the EEA, so would no longer benefit from mutual recognition, and the authorities in those countries would no longer be obliged to accept ATOL protection.  Sales by UK-established businesses would need to be protected by means that were acceptable under the legal framework of the country into which they were selling, as is the case for businesses established in all other non-EEA countries.  The CAA would continue to extend protection to bookings that were made under ATOL prior to the UK’s withdrawal.

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Implementation of these changes

The UK aspects of those changes – that is, the changes in the scope of ATOL – will be implemented by new UK legislation.  That legal change would be enacted by means of the proposed Air Passenger Rights and Air Travel Organisers’ Licensing (Amendment) (EU Exit) Regulations 2018, which have already been laid before Parliament and would be enacted in the event of a non-negotiated UK exit from the EU.  A copy of the draft EU Exit Regulations can be found here and a copy of the Government’s explanatory note is here.

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