We explain what ATOL/ABTA protection is, whether you need it, and the alternative options you can consider.
A while ago I did a poll to see how the Mickey From The UK Facebook community books their Disney World holiday. Over 1/3 of you book your holiday online separately without any ATOL protection. So no matter your personal stance on it, there is a lot of you who don't care for it, or just live with the risks.
What Is ATOL Protection?
ATOL (Air Travel Organisers’ Licence) protection is a government-run protection scheme that is operated by the CAA (Civil Aviation Authority). It's a financial-only protection scheme that covers flight-based holiday packages. When you buy a package holiday in the UK that includes at least a flight, hotel and/or car hire it will be protected. If you book a package, you'll get a ATOL certificate, and commonly a small charge (usually a few pounds) on your holiday bill. You need to take the certificate with you when you go on holiday.
When ATOL protected and your travel companies fails, you will be entitled to a refund if it happens before you depart. If you're on holiday when the travel company fails, you'll be brought home free of charge.
What Is ABTA?
You often hear ATOL with ABTA. ABTA is also a government-run protection scheme that is operated by the CAA (Civil Aviation Authority). ATOL protection is for flight based holidays, ABTA is protection for land and sea based ones (cruises, trains etc). If your travel company fails when you have booked a land or sea based package holiday through a travel agent who is an ABTA member, you'll be brought home free of charge, or refunded if you have yet to depart.
Not all travel agents are ABTA members. For a travel agent to be an ABTA member, they have to adhere to a strict Code Of Conduct. If you have any issues on your holiday that is not resolved to your satisfaction through your travel agent, you can check to see if they broke the ABTA Code Of Conduct. If you think they did, you can launch a complaint with them. Every year ABTA report on code breaches, so travel agents who are ABTA members really want to make sure they abide by the code.
What Is Not Included
If you purchase your holiday separately. For example, buying flights through Thomas Cook, tickets through an online vendor, and your hotel directly through Disney, you will not be ATOL protected. This means that if the flight operator fails, you will not be refunded if you have yet to depart, or brought home for free. You need to purchase a package holiday through one travel agent (flight, hotel and/or car hire) to qualify for ATOL protection.
Do I Need To Be ATOL Protected?
No, you don't need to be. If you want to book each part of your holiday separately, you're free to do so. Being ATOL protected isn't compulsory. Treat it as an insurance product you get for booking a package holiday.
Is Credit Card Protection Enough?
Travel companies have smartened up to people using credit cards as their go-to holiday protection, and now tacking on a ~2% charge (mainly due to the fact that's the cost of accepting credit cards, and they're most probably fed up with it eating into their margins so much).
Paying for your flights with a credit card covers you under section 75 of the Consumer Credit Act. Meaning you can get a refund from your credit card company if your airline fails.
Personally, I always book my holiday deposit with a credit card (whether it's ATOL protected or not). That still protects you under Section 75 of the Consumer Credit Act. Even if you pay the balance by debit card or cash, paying for even a penny of your flights on a credit card will cover the whole amount.
The downside to relying on credit cards is that you will only get a refund from the money you've spent on your holiday. Meaning, should the airline go bust when you're on holiday, you'll have to find your own way back. Depending on the situation, the flights could be very expensive. If you're ATOL protected, they just bring you home, you don't need to worry about the cost.
Package VS DIY
There are people that will tell you that you're insane for booking it separately. But, a lot of people do it. It is unlikely any airline will go bust, especially if you stick to the big mainstream ones, but it does of course happen. For peace of mind being ATOL protected is one less thing to worry about. Travel agents do push being ATOL protected as a benefit to book through them, but that's because they get the whole package sale, which means more profit!
ATOL protection is worth whatever value you put on it, and the value of your own personal risk tolerance. If you have a large family then booking a package and being ATOL protected might be best because it'll be very expensive getting everyone home. But, going to Florida is no cheap endeavour, and sometimes you can save hundreds of pounds booking it separately, and some people just can't afford to pay package prices and would rather take the risk.
As I said, it's always worth paying at least the deposit on a credit card, even if you book a package ATOL protected holiday, just for that extra bit of protection.
Other Things To Consider
Don't rely on your travel insurance to cover you. The majority of travel insurance policies do not cover a company going out of business. Make sure you check your credit card terms and conditions for information on how you're protected using the Consumer Credit Act. Debit card payments are rarely protected, but you might be able to claim from your bank under Visa’s voluntary policy. This is something you'll have to check with your bank.