ATOL Bond

The Civil Aviation Authority (CAA) is the UK’s specialist aviation regulator. It manages the UK’s principal travel protection scheme, the Air Travel Organiser’s Licensing (ATOL) scheme.

An ATOL bond is required by law when a firm sells:

• Flight based packages
• Charter flights
• Scheduled flights where an airline ticket is not issued straight away

In accordance with the ATOL license, the Civil Aviation Authority (CAA) will require an ATOL bond for new applicants or if the licence has been held for under four years.

The CAA’s minimum ATOL bond requirement for new licence holders is £40,000 or an amount equal to 15% of ATOL turnover, whichever is the higher amount. The amount of bonding required may be reduced annually at renewal.

Small Business ATOLs (SBA) are for licence holders who intend to sell less than 500 flights or holidays a year and intend to keep the numbers at the same level in future years. An ATOL bond of £40,000 is required in the first year; with the bonding amount subsequently reducing over the course of the next three years.

The ATOL bond is used in the event that a license holder cannot meet its obligations to its customers and used initially to being home any passengers that would otherwise be stranded abroad and to reimburse customers who have paid for a flight of holiday covered by the licence but are unable to travel.