ATOL vs ABTA: What Each Covers When a Holiday Goes Wrong

ATOL and ABTA are two different things, and which one matters to you depends on what you booked. ATOL is a financial protection scheme for package holidays that include a flight, run by the Civil Aviation Authority. ABTA is a trade association whose members must follow a code of conduct, and it also runs financial protection for package holidays that do not include flights, such as rail, cruise, coach or car hire packages¹.

The practical difference is what happens when a travel company fails. If your holiday includes a flight and was sold to you in the UK by a travel company, that company must protect your money through the ATOL scheme¹. If your package does not include a flight, the company may instead protect it through a bond with ABTA or another approved organisation, a financial failure insurance policy, or a trust account¹. A company can hold ATOL, be an ABTA member, both, or neither.

What ATOL covers: flights and flight-inclusive packages

ATOL, the Air Travel Organiser's Licence, covers package holidays that include flights¹. Travel companies that sell packages including a flight to customers in the UK must protect your money through the ATOL scheme, which is operated by the Civil Aviation Authority¹. The scheme also covers some flight-only sales¹.

If your airline, travel company or agent becomes insolvent, ATOL makes sure you can get a refund before departure, or that you are brought home if you are already abroad¹. An ATOL certificate is issued as proof of protection¹. If an ATOL-licensed travel company collapses, the scheme ensures your money is protected and you can get home².

The certificate matters because it is the document that sets out what is covered. If a booking is protected, an ATOL certificate is issued as soon as payment is made, even a deposit, and it is a standardised document that makes clear how the trip is protected⁶. If an ATOL-protected holiday or charter flight is booked and the tour operator, airline or accommodation provider goes out of business before travel, a full refund can be claimed⁷.

There are limits. The majority of bookings made directly with airlines are not covered by ATOL². Flights you book yourself are not covered as standard, so you may not be entitled to a refund or a flight home⁸. Package sales made in the UK by travel businesses established in the EU, Iceland, Liechtenstein and Norway are also not covered; those bookings must be protected by the system in the company's home country².

What ABTA covers: package holidays sold by member firms

ABTA is a trade association, and it does not represent customers against travel companies⁹. What it does is set standards for its members and run financial protection for certain holidays. ABTA protects package holidays that do not include flights, such as those involving rail, cruise, coach or car hire, as well as travel agency bookings¹.

For package holidays that do not include a flight and are sold to customers in the UK, travel companies may provide a bond to ABTA or another approved organisation, take out a financial failure insurance policy, or deposit money in a trust account¹. ABTA can confirm what type of financial protection an ABTA member travel company has in place¹⁰.

ABTA membership also brings obligations that affect what you are told and offered. When booking through an ABTA member, you must be given accurate information which is not misleading¹¹. If your travel company is an ABTA member, its booking conditions should reflect ABTA's Code of Conduct¹². All ABTA members have to meet entry criteria designed to minimise the chance of fraudulent companies joining¹³.

If an ABTA travel agent goes out of business, ABTA will ensure the tour operator or other supplier honours payments made to the travel agent so the holiday can continue. If an ABTA tour operator goes out of business before travel, ABTA will make sure you get a full refund. If you are on holiday when the tour operator goes out of business, ABTA will cover the cost of bringing you home¹.

One important limit: if you booked your travel service with an ABTA travel agent member and they go out of business, you cannot claim from the financial protection scheme administered by ABTA, except where you booked a linked travel arrangement protected under the ABTA scheme¹.

ATOL or ABTA: which applies to your booking

The dividing line is the flight. If your package includes a flight and is sold to you in the UK, ATOL applies¹. If your package does not include a flight, ABTA or another protection route applies¹.

Not all holidays are covered as standard, so it is worth checking both ATOL and ABTA protection with your travel agent or provider⁸. If you are booking a package holiday, make sure the tour operator or travel company is a member of a recognised trade association such as ABTA or ATOL¹⁴.

All UK tour operators selling flight-based holidays must hold an ATOL licence¹³. That is a legal requirement, not a voluntary badge, which is why the ATOL certificate is the document to look for on a flight-inclusive booking.

Where neither scheme protects you

A hotel-only booking is not a package holiday, so it falls outside both schemes¹. The same applies to other single-component bookings where you assemble the parts yourself. If you booked your flights yourself, they are not covered by ATOL as standard, so you may not be entitled to a refund or a flight home⁸.

There is also a gap around who sold you the holiday. Package sales made in the UK by travel businesses established in the EU, Iceland, Liechtenstein and Norway are not covered by ATOL; those bookings must be protected by the system in the company's home country². If you booked with an ABTA travel agent member and they fail, you cannot claim from the ABTA-administered financial protection scheme, except where you booked a linked travel arrangement protected under the ABTA scheme¹.

Travel insurance is a weak substitute. Only 12% of policies cover holiday company bankruptcy and just 10% cover airline failure⁵. ABTA's own position is that it is down to you to buy appropriate insurance at the time of booking, so your money is protected if you have to cancel¹⁵. If you cancel travel arrangements without travel insurance, there is no refund¹⁵.

What happens when a travel firm or airline fails

The first thing to establish is which scheme, if any, covers the booking, because the route to a refund runs through it. Claims for a package holiday including a flight, and some flight-only sales, sold to customers in the UK should be submitted to the Civil Aviation Authority¹. If the ABTA member protected the package by way of a bond with ABTA, the claim is administered by ABTA unless payments were made by credit card, in which case the claim goes to the credit card issuer¹.

If you have not travelled yet, you could be entitled to a refund or be offered alternatives. If you are already away, the agent or ATOL may place you in different accommodation or on a different flight home, and will try to minimise disruption⁸. If the company is covered by ATOL, ABTA, ABTOT or BCH, you are entitled to finish your holiday and get transport home if you are already on holiday⁷.

Where a travel company cancels your arrangements, the ABTA Code of Conduct says broadly that the company should offer an alternative if available, or a refund¹². Your travel company's booking conditions should contain specific details of what you will be offered if your holiday arrangements have to be cancelled¹². Travel companies sell their holiday arrangements on the understanding that customers agree to the terms and conditions of the contract, which is why cancellation fees can apply¹⁷.

How to claim a refund under ATOL or ABTA

For packaged holidays, if the travel provider does not provide the refund within 14 days of cancellation, contact ATOL for a flight package holiday or ABTA, or a similar guarantee scheme, for a non-flight one¹⁹.

If your claim to ABTA is successful, all refunds are paid by BACS, so you need to provide your bank account details¹⁸. ABTA is unable to make payments onto credit cards or into savings accounts¹⁸.

If you paid by credit card, there may be a second route. Under section 75 of the Consumer Credit Act, payments between £100 and £30,000 made by credit card are protected if the goods or services paid for have not been provided¹. If the ABTA member did not financially protect your travel arrangements, you cannot submit a claim to ABTA, but credit card payments can be claimed from the card issuer¹.

For debit cards, or credit card purchases under £100, you may be able to use the chargeback scheme⁴. Chargeback is operated by the card schemes Visa, Mastercard and American Express²¹. It is a voluntary scheme and not guaranteed to work³. A chargeback claim can only recover the amount paid on the debit or credit card, not any other consequential losses¹⁹.

Complaints, disputes and where to get help

If your holiday company is an ABTA member, you can make a complaint using its online complaints hub²¹. ABTA has two schemes to help customers resolve disputes that arise with its members, and it deals with nearly 20,000 complaints every year⁹. You will need to liaise with the company before registering your dispute with ABTA¹¹.

When registering a dispute, you need the confirmation invoice or ATOL certificate, all letters and emails relating to your dispute, and documented phone conversations including the date and what you discussed¹¹. Disputes can only be submitted and handled in English, and ABTA aims to respond to all disputes within 28 days if not sooner¹¹. If you are making a complaint through the ABTA website, you can upload files to support it⁹.

If you are not happy with the company's response, you can take your complaint further either to court or through the ABTA arbitration scheme²³. The arbitration scheme is processed and administered by an independent body, and ABTA has no influence on the outcome²⁴. A claim for compensation through the ABTA Arbitration Scheme can be made for up to, but not exceeding, £5,000 per person²⁵. Preparing documents is less formal than at court²⁶. If you have already paid for the arbitration to proceed, you will not be entitled to a refund of the fee²⁷.

If you have a complaint against a non-ABTA company, you will need to ask them what procedures they have for dealing with your problem⁹. For financial services complaints, the Financial Ombudsman Service can look at cases involving firms it covers, and the ombudsman has published a case study about a customer whose travel company stopped trading²⁸. For package holiday rights more broadly, see package holiday rights and financial protection.