The Air Travel Trust (ATT) fund has reached a significant financial milestone, hitting £200 million by June 2024 due to a surge in Atol bookings.
This growth reflects a positive trend in passenger volumes and indicates the relative health of the travel industry. The Atol-Protection Contributions (APC) have played a pivotal role in this financial strengthening.
Growth in Atol-Protection Contributions
The Air Travel Trust (ATT) fund, which supports the Atol-protection scheme, has witnessed a substantial rise, reaching an impressive £200 million by the end of June 2024. This increase in the fund is indicative of the robust health of the travel sector.
The Atol-Protection Contribution (APC) payments to the ATT for the 12 months leading up to March 2024 amounted to just over £75 million, a notable increase from the previous year’s almost £66 million. These payments covered 30.1 million passengers, marking an increase of 3.5 million year on year.
Impacts of Passenger Volume Growth
According to the latest accounts, Atol-protected bookings showed significant improvement with forward-booked passenger volumes seeing a 12% rise compared to 2019 levels, and an 11% improvement over 2023.
The trust’s financial year closed on a high as its balance rose to £185 million by March 31, 2024, up from £116 million in March 2023. By the end of June, the fund had reached £199 million.
Minimal Atol-Holder Failures
The financial year saw only six Atol-holder failures, which is notably low historically. The related costs were just under £4 million with £3.9 million attributed to the collapse of the online luxury operator Luxtripper in October 2023.
A minimal number of Luxtripper customers, only 75, required repatriation throughout the financial year, while nearly 2,200 customers were eligible for refunds.
The trustees reported just a single Atol failure since March 2024, which is expected to cost the fund about £200,000, further indicating the scheme’s stability.
Expenses and Investments
Expenses of the ATT increased to approximately £6.6 million, an uptick from £4.8 million the previous year. Significant investment was made into consumer claims infrastructure, with £1.1 million allocated to the development of a new consumer claims portal.
This portal is anticipated to enhance consumer experience and streamline internal processes considerably over the coming years.
Financial Health and Interest Accrual
Despite increased expenses, the fund’s financial health remains strong, with accrued interest reaching nearly £7 million, a dramatic increase from under £1 million in the previous year. This interest effectively balanced the fund’s expenses, further cementing its fiscal robustness.
The ATT’s cash position is supported by an additional £75 million credit facility, reinforcing its capacity to manage potential future challenges.
The insurance policy covering potential collapses of major Atol holders during the Thomas Cook failure period has not been renewed, but government assurance remains strong, with expectations of additional financial support if needed.
Future Assurance and Government Support
The trustees have expressed assurance in the long-term stability of the fund. The original trust deed, set to expire in January 2025, has been administratively extended by the transport secretary for 125 years.
This move by the government highlights continued commitment to ensuring the ATT remains a vital component of the travel industry’s safety net.
The Air Travel Trust fund’s substantial growth, coupled with strategic investments, positions it well for future challenges. Continued government support and increased passenger volumes indicate a promising outlook for the travel sector.
With minimal Atol-holder failures and a robust financial standing, the ATT fund stands as a reliable safeguard in the travel industry.
