Bonding system for holidaymakers’ protection fund proposed
Charge to increase compensation fund would be 0.25 per cent of turnover, regulator says
The Commission for Aviation Regulation is looking at ways to replenish the compensation fund for holidaymakers. Photograph: Jason South
The Commission for Aviation Regulation 1ays proposed charges designed to increase a compensation fund for holidaymakers would amount to only 0.25 per cent of travel agents’ and tour operators’ turnover.
The regulator, which oversees the travel industry, wants to replenish the travellers’ protection fund, used to compensate people affected when travel agencies and tour operators go out of business.
One of its proposals is a bonding system that would provide cover of up to 20 per cent of a tour operators’ turnover and 8 per cent of a travel agents’ turnover in the case of failure.
The commission, which is led by Cathy Mannion, says the cost of funding the insurance bond needed to provide this cover would amount to just 0.25 per cent of a company’s turnover for one year.
The regulator also says this would be a once-off charge, as it should be enough to bring the fund up to a level where it would be able to provide holidaymakers with sufficient protection, should a travel company go out of business.
A report detailing the proposal, one of a number it put forward, shows the regulator estimates that the charge would cost a typical travel agent €600-€800, while it would cost tour operators €1,500-€2,000.
Payments such as the €3.5 million given to Irish people stranded by last year’s collapse of Lowcostholidays have cut the amount in the fund from a high of €7.5 million in 2007-2008 to €1.8 million.
The regulator is consulting with the industry on its proposals.