ATOL, ABTA and IATA in business travel

Three credentials turn up in the same sentence on almost every travel management company's website. One of them is a statutory licence. One is a trade association membership. One is an accreditation about who is allowed to issue airline tickets. Telling them apart is the difference between knowing what protects your money and assuming something does.

The prohibition, and who is outside it

Start with what the licence actually prohibits, because everything else follows from it.

Two things are worth noticing in that sentence. The trigger is “make available flight accommodation” — not “sell holidays” and not “be a travel agent”. And the prohibition has four exits, of which the third is a list of eight exemptions in the next regulation.

Sub-paragraph (h) is the one that matters to a corporate buyer, and it is the one that never appears in any buyer's guide to choosing a travel management company.

Regulation 10(3) defines the term: “an agreement which is concluded between a trader and another person, for the purpose of booking travel arrangements in connection with that other person's trade, business, craft or profession”. That is a description of the standing agreement between an organisation and its travel management company. Regulation 10(2) adds a condition: the agreement has to include all the current terms the CAA has published for such agreements, and the CAA must give at least 28 days' notice before a variation takes effect.

The question this producesAre bookings made for us under our agreement ATOL-protected, or are you relying on the regulation 10(1)(h) exemption? Both are legitimate answers. Not knowing which one applies to you is not.

The second carve-out, in a different set of regulations

The Package Travel and Linked Travel Arrangements Regulations 2018 are the other half of what a consumer gets: insolvency protection, information requirements, liability for the performance of the package. Regulation 3 sets the scope, and paragraph (2)(c) takes business travel out of it.

And regulation 3(3) defines the term almost exactly as the ATOL Regulations do: “a ‘general agreement’ means an agreement which is concluded between a trader and another person acting for a trade, business, craft or profession, for the purpose of booking travel arrangements in connection with that trade, business, craft or profession”.

Two separate statutory instruments, drafted six years apart, reaching for the same concept and pointing the same way. That is not an accident and it is not a gap someone forgot to close: it is a policy position that business buyers negotiate their own terms.

So what does protect the money?

Whatever your contract says, plus whatever the supplier does of its own accord. That is a shorter list than the consumer regime, and it is a list you can actually read before you sign:

• How funds are held. Lodged funds, deposits and prepayments may sit in the supplier's general trading account or in a segregated or trust arrangement. The two behave very differently in an insolvency. Ask which, and ask for it in writing.
• Whose credit the airlines are extending. An IATA-accredited agency settles through the Billing and Settlement Plan on its own accreditation. An agency booking through a consolidator is settling on someone else's. It changes who is exposed if a link in the chain fails.
• What the contract says about failure. Repatriation, rebooking and refund obligations are contract terms in business travel. In the consumer regime some of them are statutory. Read the clause.
• Whether anything is voluntarily inside ATOL. Some suppliers hold an ATOL and apply it to corporate bookings even where the exemption is available. If so, an ATOL Certificate should be issued for the booking and the £2.50 contribution is being paid on it.

The three credentials, side by side

Which is why a sentence like “every agency listed holds an ABTA or IATA licence” does not say what it appears to say. Neither of those is a licence. An agency can hold both and still be relying on the regulation 10(1)(h) exemption for everything it books for you.

The ATOL Protection Contribution, since it comes up

The APC is £2.50 per passenger. It is paid by the ATOL holder to the Air Travel Trust, and the CAA is explicit that it is not a passenger charge and should not appear as an additional charge or a tax. Holders have a statutory duty to pay within six weeks of the end of each reporting period, and Small Business ATOL holders make an advance payment of £1,250.

It matters to a buyer for one reason: if a supplier is charging you something described as an “ATOL fee” per passenger, that is a commercial charge it has chosen to make, not a statutory pass-through, and it is negotiable like any other line.

What to put in the tender

1. State whether bookings made under our agreement will be ATOL-protected or made in reliance on the regulation 10(1)(h) exemption.
2. Name the legal entity that will hold the ATOL, the ABTA membership or the IATA accreditation, with its company number, so we can check the entity rather than the brand.
3. Describe how our lodged funds, deposits and prepayments are held and whether they are segregated.
4. Set out the repatriation, rebooking and refund obligations that apply if you or a supplier in your chain fails.
5. Confirm whether supplies to us will be accounted for under the Tour Operators Margin Scheme. Why that changes the price.

All five are in the RFP and ITT template, so they go out with everything else rather than being remembered separately.

Common questions