The Air Travel Insolvency Protection Committee (ATIPAC), in its annual report welcomes the inclusion of powers for the Civil Aviation Authority to replenish the Air Travel Trust Fund in the Civil Aviation Bill now before Parliament.

ATIPAC has also given its full support to the work the CAA has been carrying out with the Department for Transport to consider the future of financial protection for holidaymakers.

However, it warns that if action is not taken quickly to modernise the protection system there is a risk that major tour operators will begin to re-align their businesses to sell outside the scope of ATOL to compete more effectively with no-frill carriers. In addition, the Committee remains concerned that passengers continue to be unprotected when booking directly with a scheduled airline when research shows they are unaware of this fact.

John Cox, ATIPAC`s Chairman, said: The Committee has pressed Government for 12 years for legislation to provide a levy to replenish the Air Travel Trust Fund and it is very pleased that a Bill is now before Parliament.

However, we continue to have very serious concerns about the growing proportion of leisure trips that fall outside ATOL and where the consumer is now unprotected. Consumers are confused and many believe they are covered when they are not.

Action is urgently required to extend protection to cover all UK-originating air travel. This would increase consumer confidence, provide easier market entry and the development of new small businesses.