The Air Travel Insolvency Protection Advisory Committee (ATIPAC) has congratulated the Government on its decision to introduce the ATOL Protection Contribution (APC) and is pleased that the Civil Aviation Authority has worked with the travel industry to ensure its successful introduction.

In its eighth Annual Report, published today, the Committee highlights the importance of this reform and the benefits it will bring to industry.

John Cox, Chairman of ATIPAC, said: "The Committee has been calling for this reform since its inception in 2000. Over the past year we have been carefully monitoring and advising the CAA and have been reassured by the work they have done with industry to make the introduction of the APC seamless and trouble free. The introduction of the £1 per passenger APC simplifies the regulatory process and in most cases eliminates the need for ATOL holders to provide a bond.

"The introduction of APC will also mean that the Air Travel Trust Fund (ATTF), which is used to pay refund and repatriation costs, will gradually be restored to a healthy and sustainable balance, from its currently overdrawn state."

However the report also focuses on the Committee's significant concern over the lack of financial protection for air travellers booking direct with a scheduled airline.

The recent failure of the British carrier Silverjet, as well as the other two business class only airlines, Maxjet and Eos, within the last seven months has demonstrated the significant financial loss passengers can be exposed to in the event of an airline going out of business.

John Cox said: "Airlines are not providing suitable protection and advice for their passengers. Information about financial protection is negligible and, in the event of an airline failing, passengers often have no choice but to pay their own repatriation costs. Those yet to travel will often have to pay for replacement flights or face losing the value of any pre-paid element of their holiday.

"Passengers travelling with an ATOL-protected tour operator face none of these risks and will be repatriated at no additional cost or receive a full refund if they have yet to travel, should their tour operator cease trading.

"This two-tier protection system must not be allowed to continue and the Committee reiterates its call for airlines to be brought into a financial protection scheme."