It has long been a source of irritation to me that the CAA collect a huge amount of information about the outbound travel industry, and choose not to analyse or publish any information about the data they have accessed. Until 2007, the CAA used to publish a twice yearly bulletin, called ATOL Business, which sought to tell the industry at least a little bit about our market. That stopped, apparently due to problems in collecting data, and has not reappeared in the intervening 8 years. We can find out some retrospective information by reading the annual reports of the Air Travel Trustees, but it is remarkably difficult to see a current view on what is happening.
To be fair, there is live data on the CAA website, and you can download reports showing the numbers of seats licensed to the top 250 ATOL holders, as well as downloading a complete list of all authorised seats for all ATOL holders. However, that is live data, so you cannot easily get access to older data…grrr!
Late in 2014, I made the effort to download and retain these 2 reports, and have carried out a similar exercise this year. At least I can therefore compare and contrast the ATOL position now with the position 12 months ago. Whilst it’s not a comprehensive set of measures, you can get a feel for what is happening in the market, and what has changed year on year. It would however be good if the CAA, as the regulator, actually volunteered this information to the industry, rather than making us have to work to find this out.
So, having made the effort, what picture emerges? The good news is that the ATOL scheme continues to grow – albeit relatively slowly. There are currently 26,528,831 fully licensed ATOL seats, compared to 25,569,854 at the end of October 2014. Whilst that is only a 3.7% year on year growth, the protected market is moving in the right direction. What we can’t tell from that is how many of these are Flight Plus, and how many are fully protected ATOL seats.
The CAA have started over the past couple of years giving discounts to certain ATOL holders in different categories – interestingly, this has never been the subject of any formal consultation, and in a mutual scheme of financial protection, you would have thought that some might object to their competitors being allowed by the regulator to pay less for protection. However, if all ATOL seats led to an income of £2.50 to the Air Travel Trust, this would give an income in the current year of £66.3 million.
The last couple of years have seen low levels of failure – in the year to March 2015, £5.5 million was paid in claims, and only £4million in the year before that. Administration costs are quite high – the trustees take an insurance policy to cover the costs of major failures, and this costs around £11 million per annum in premiums. There are another couple of million in running costs, but if failures continue at the same sorts of levels, this means that the reserve fund is increasing at more than £40 million per year – which one might argue is unnecessarily excessive. Is this why the CAA don’t want this level of detail to be too visible?
Looking at individual ATOL holders, Tui continue to grow, albeit only slightly – their main ATOL is now licensed for 4.75 million seats, whereas Thomas Cook continue to contract – conversely, their main ATOL has shrunk from 3.9 million to just over 3 million year on year. There are 6 ATOL holders licensed for more than 1 million seats – Tui, Thomas Cook, First Aviation (the Monarch scheduled business), Jet2holidays, Expedia and On The Beach. It is this last Company which anticipates the largest year on year growth, increasing its licensed seats from 726, 153 to 1,007,974 – a year on year growth rate of almost 40%. And how many of us have noticed the growth of British Airways Holidays? They are now licensed for 778,000 seats.
Interestingly, there are only now 32 businesses licensed for more than 100,000 ATOL seats, so the industry is getting more concentrated, or at least the protected sector is.
I was a little surprised to find that the number of ATOL to ATOL sales are dropping significantly. These numbers are however a little false, since the vast majority of ATOL to ATOL sales comprise sales made under the VAT Transport Company scheme – by which travel businesses can reduce their VAT liability by making an in house supply, although the numbers here have fallen off significantly from 12.95 million to 11.6 million seats. In practice, genuine ATOL to ATOL sales – those made by consolidators, which will typically be dynamically packaged, are actually increasing slightly year on year – albeit only by 20,000.
There are also some small changes in the consolidator marketplace. Gold Medal, who have probably been the market leader for many years in this sector are no longer the biggest – Lime Travel Management, the consolidation business of British Airways, are now marginally larger. However, the leaders of the DNATA organisation can sleep soundly, in that Travel 2 have more than made up for the reductions by Gold Medal with an extra 60,000 licensed ATOL to ATOL sales year on year.
Within this market, it is also interesting to see the emergence and growth of Skylord Travel, whose consolidation business is scheduled to double in size year on year, from 28,000 to almost 56,000 seats.
So, even after a short review, it’s possible to extract a lot of information from the CAA data. Who knows whether I have identified the most important or relevant information from this data? One would like to think that the CAA themselves would know, but they certainly aren’t telling any of us!