ATOL Certification for Travel Agents

What is the ATOL certification for travel agents ?

ATOL stands for Air Travel Organisers’ Licensing. The UK Civil Aviation Authority introduced this scheme as early as 1973. The ATOL certification is an obligatory certification a travel agent or a tour operator must have if the travel package they sell includes at least a flight.

As such, ATOL is a type of financial protection a tourist receives from you when they buy a holiday package that includes a flight.

If you are a travel agent or a tour operator in the UK, it is obligatory for you to offer an ATOL certificate to customers to whom you sell a travel package or just flights. This is different and separate from travel insurance. The law in the UK requires all tour operators, independent travel agents, travel agencies and any other type of travel business that sells air travel to hold an ATOL license.

In essence, what this means is that if you stop trading while your customers are on holiday consuming the travel services they bought from you, then they will be reimbursed by the ATOL scheme.

It is the responsibility of the travel organizer to furnish their customers with an ATOL certificate, alongside other requisite information, both before, during, and after the sale of the package, as evidence of their legal authorization to sell flight packages. You have to provide your customers with an ATOL certificate as soon as they pay you, even though they paid just a deposit.

A bit of history

The Civil Aviation Authority (CAA), the institution that overseas and regulates all aspects of civil aviation in the United Kingdom, introduced ATOL in 1973.

The Court Line group faced collapse on 15 August 1974. This marked a dramatic event in the tourism industry. As the second largest tour operator during that period, its collapse affected its subsidiaries, including Clarksons Holidays, Horizon and Medvillas. Clarksons Holidays, holding an ATOL license, theoretically offered insurance coverage through its bond.

While the ATOL scheme successfully repatriated around 35,000 stranded customers, approximately 100,000 individuals who had prepaid for their holidays remained without coverage due to insufficient funds. This incident dealt a blow to consumer confidence and garnered substantial media attention. As a direct consequence of this, the UK government established the Air Travel Trust to cover any excess costs not covered by ATOL.

Similarly, on 23 September 2019, Thomas Cook’s collapse led to the largest peacetime repatriation in UK history. Since Thomas Cook had an ATOL licence, the Civil Aviation Authority organized the repatriation of over 150,000 British holidaymakers.

How to obtain the ATOL licence if you are a travel agent

To become ATOL certified, a travel agent or a tour operator in the UK must follow a set of guidelines and meet certain criteria set by the Civil Aviation Authority (CAA). Here are the general steps and requirements:

  1. Apply for an ATOL License: The travel agent needs to submit an application to the CAA for an ATOL license. This involves completing the necessary forms and providing information about the business, its financial standing and its activities.
  2. Financial Protection Requirements: The travel agent must demonstrate that they have adequate financial protection in place to cover the cost of refunding and repatriating customers in the event of financial failure. This typically involves providing evidence of bonding or insurance arrangements.
  3. Compliance with ATOL Regulations: The travel agent must comply with all ATOL regulations, including those related to booking and issuing ATOL protected flight-based packages. This may involve implementing specific booking and payment processes to ensure compliance.
  4. Training and Knowledge: Travel agents and their staff involved in selling or managing ATOL protected bookings may need to undergo training to ensure they understand their responsibilities under the ATOL scheme and can provide accurate information to customers.
  5. Regular Reporting and Compliance Checks: Once certified, the travel agent will need to adhere to ongoing reporting requirements and may be subject to periodic compliance checks by the CAA to ensure continued compliance with ATOL regulations.
  6. Renewal of ATOL License: The ATOL license typically needs to be renewed annually and the travel agent must continue to meet the criteria set by the CAA to maintain their certification.

By following these steps and meeting the requirements set by the CAA, a travel agent can become ATOL certified, providing assurance to customers that their bookings are financially protected.

Do I need my accounts to be audited under the ATOL Reporting Scheme ?

In 2016, the Civil Aviation Authority (CAA) implemented alterations to the reporting obligations for ATOL holders and their reporting accountants, known as ATOL Reporting Accountants (ARA). This initiative aims to safeguard the public against financial losses or against being stranded abroad due to the insolvency of their booked travel provider.

The ARA scheme, created by the CAA, aims to elevate the quality of ATOL reporting and to ensure the accuracy of financial information submitted by ATOL holders.

Only accountants who are part of the ATOL Reporting Accountants (ARA) Scheme can sign the accounting paperwork that needs to be submitted in support of renewing a travel agent’s ATOL certification. Don’t worry LAS Accounting has partnerships with such accountants to streamline the accounting side of your ATOL renewal application.