ATOL - From 1 January 2021
With the UK having left the European Economic Area (EEA) the following changes apply, 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 are no longer obliged to recognise ATOL protection for package sales made in their territory, and ATOL no longer covers package bookings made in the EEA. ATOL will continue to protect bookings that were made on or before 31 December 2020, but sales made into EEA countries after 31 December 2020 must meet local requirements for insolvency protection. Affected businesses need to make their own arrangements in this regard.
Businesses established in EEA countries
The UK is no longer obliged to recognise the protection arrangements made by EEA businesses.
Bookings made in the UK after 31 December 2020 must be covered under ATOL protection, so EEA-established businesses selling in the UK must apply for an ATOL if they have not done so already.
The CAA accepts transitional measures, as set out below.
UK Travel Agents selling packages organised by EEA-established package organisers
It is no longer 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 must either ensure that the organiser holds its own ATOL, or the agent itself must obtain an ATOL to cover those sales.
Transitional measures from 1 January 2021
As regards EEA-established businesses selling into the UK, during the three months immediately following the end of the transition period we do not expect actively to 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 is no longer a member of the EEA, so no longer benefits from mutual recognition, and the authorities in those countries are no longer obliged to accept ATOL protection. Sales by UK-established businesses must be protected by means that are acceptable under the legal framework of the country into which they are selling, as is the case for businesses established in all other non-EEA countries. The CAA will continue to extend protection to bookings that were made under ATOL prior to 1 January 2021.
The UK aspects of these changes – that is, the changes in the scope of ATOL – are implemented by new UK legislation. That legal change is enacted by means of the Air Passenger Rights and Air Travel Organisers’ Licensing (Amendment) (EU Exit) Regulations 2018. A copy of the EU Exit Regulations can be found here and a copy of the Government’s explanatory note is here.