ATOL protection: What does it cover and will it get you a refund on your package holiday?

What does ATOL protection actually do? As data shows many holidaymakers get it wrong, this is what it does… and DOESN’T cover

  • Those booking holidays can be covered by ATOL or its sister scheme ABTA
  • But most consumers are in the dark about what protections these offer them
  • We explain how the schemes could get you a refund on YOUR package holiday 

Compensation for cancelled package holidays could be set to change with a shake-up of how ATOL rules work – but research shows consumers don’t understand the rules we’ve got now.

Holidaymakers are uncertain of their refund rights and entitlements around replacement holidays and flights, according to the Civil Aviation Authority, which oversees the ATOL scheme.

The CAA, which is consulting on increasing ATOL funding, also noted that ‘consumers lack knowledge of the key elements of ATOL protection,’ especially around compensation when airlines fail.

So what is ATOL, and what does it cover and not cover?

Are you covered? Consumer protection is in place for holidays booked with failed travel providers – but it all depends on what kind of transport it involves

Everything you need to know about ATOL

ATOL stands for Air Travel Organiser’s Licence. ATOL protection covers people taking a package holiday with a flight involved.

The scheme was set up back in 1973 to cover people flying abroad from being cut off if their holiday firm failed. It promises holidaymakers a refund or replacement trip if a holiday tour firm fails before their trip starts.

If a package holiday company goes bust during a trip, ATOL protection pays for accommodation and can handle refunds for things like car hire and flights home.

>> I’ve been waiting THREE YEARS to get my money back for a Thomas Cook holiday – is there any hope?

What is ABTA?

If you are wondering what protection you get for booking holidays that don’t involve a flight, that is where ABTA steps in.

Protection from ABTA, or the Association of British Travel Agents, covers package holidays including travel by road, sea or train.

If your package holiday firm goes under, ABTA will pay out for money lost on accommodation and travel, including transport home if you end up stuck overseas.

However, ABTA says package holidays that are for less than 24 hours, or are for business travel, may not be protected.

What is not covered by ATOL or ABTA?

A lot of things – for example, if your luggage is lost or stolen, if you need medical treatment overseas, if you need to cancel a trip or if there are any delays that rack up extra costs for you. 

This is why it is still important to get the right travel insurance, even if your holiday is covered by ATOL or ABTA. 

>> Read our guide to getting the right travel insurance policy 

DIY package holidays are also not covered by either scheme. 

Exception: ATOL usually won't pay compensation for a cancelled flight, unless it is part of a package holiday and the operator has gone under

Exception: ATOL usually won’t pay compensation for a cancelled flight, unless it is part of a package holiday and the operator has gone under

One major exception with ATOL is that it does not pay out for cancelled flights alone, only for airline travel as part of a package holiday.

The CAA said ATOL only covers problems with flights that do not involve the operator going under in rare circumstances, such as ‘on flights where you pay for your ticket in instalments, or do not receive your ticket straight away after paying’.

If you have booked a flight by itself through a travel firm, that may be ATOL protected if the firm fails, but it depends on the circumstances.

ATOL said: ‘Your travel company should make it clear if your flight-only booking is ATOL-protected before you book. If you purchase an airline ticket from an airline or travel company and you receive a valid e-ticket in exchange for payment, the ATOL scheme does not cover this.’

However, separate laws on package holidays do entitle you to a refund if you book a flight from a package holiday firm that is later cancelled.

Travel insurance can help fill the gaps in both ABTA and ATOL protected holidays.

If you book travel or accommodation using a credit card, Section 75 protection means your credit card firm can pay out for cancellations. 

However, this only works on amounts between £100 and £30,000, and the cancellation cannot be your fault.