ATOL Bond (CAA)
“The ATOL bond is used in the event that a license holder cannot meet its obligations”
The Civil Aviation authority (CAA) is the UK’s specialist aviation regulator. It manages the UK’s principal travel protection scheme, the Air travel Organiser;s licensing (ATOL) scheme.
An ATOL license is required by law when a firm sells:
- Flight based packages; or
- Charter Flights
In accordance with the ATOL license, the Civil aviation Authority (CAA) will require an ATOL bond for new applicants or if the license has been held under four years.
The CAA’s minimum ATOL bond requirement for new license holders is £40,000 or an amount equal to 15% of ATOL turnover, whichever is the higher amount. The amount of bonding required may be reduced annually at renewal.
Small Business ATOLs (SBA) are for licence holders who intend to sell less than 500 flights or holidays a year and intend to leep the numbers at the same level in future years. An ATOL bond of £40,000 is required in the first year; with the bonding amount subsequently reducing over the course of the next three years.
The ATOL bond is used in the event that a license holder cannot meet its obligations to its customers and used initially to bring home any passengers that would otherwise be stranded abroad and to reimburse customers who have paid for a flight or holiday covered by the license but are unable to travel.
Principal (Non-Licensable Bond)
As a principal, who organises non-licensable packages (two components of travel arrangements not including flights), you are required to have financial protection in place for your customers. As an ABTA member, ABTA can provide an ABTA bond for your non-licensable activity in order to satisfy legal requirements. This is usually 15% of gross turnover for new members, with a minimum of £5,000 although higher bonding levels will apply under certain conditions specified by ABTA.
In the event that you are acting as a principal, with single element sales (e.g. Accommodation only, ) the law does not require you to have financial protection in place for your customers, but you can choose to do so.