A year into its implementation the ATOL Protection Contribution (“APC”) Scheme has, just as I predicted, proved to be seriously flawed thus the CAA will shortly go to industry consultation with a view to increasing the contribution on 1 October 2009. These consultations are nothing more than a sop to the industry under the guise of “political transparency”. A £1 levy never worked, despite the expensive business modelling of City spreadsheet jockeys, but was an easy number as a first stage sell to the industry who led by the same old faces at the same old associations and consortia, charged lemming like into this mess.
Not unreasonably the “Big Two” have openly expressed their disdain for any increase in the levy. They of course have the largest voice as between them make up over 50% of the Air Travel Trust Fund’s levy income each year. However not to be ignored in rationalising their position is the fact that this scheme is slowly but surely cementing their position in a marketplace as an unbreakable duopoly. The levy statistics alone underscore this. When implemented last year, APC allowed the “Big Two” to utilise previously committed bonding and funding resources to go on a mad acquisition trail. In the intervening period between them they have acquired, and continue to acquire, many successful and profitable travel companies.
Therefore is the biggest issue really that an increase in APC will result in an additional £5 million annual “contribution” for a large corporation that recently reported annual profits in excess of £320 million? No the biggest issue is the barriers to entry this scheme has caused to the entrepreneurs of tomorrow in what should be a free market economy. The government and the CAA, through APC, have facilitated a structure where the strong have unfair advantages and get stronger, either through acquisition or by seeing smaller entities “culled”. Why? Because the CAA retains the right to require bonding that is no longer available from banks or insurance companies. The CAA’s implementation of APC completely decimated this market and yet incredibly (You couldn’t make this up!) the CAA still require struggling smaller operators and ALL new applicants for the first four years of existence to provide bonds. Where do they get them from? Even Small Business ATOL (“SBA”) holders are required to put up a minimum £40,000 bond. Lest we forget the SBA scheme was initially set up at government bidding to enable start ups and small businesses to hold an ATOL at minimal cost. What a joke!
However the biggest joke is that the trade associations and agency consortia who “allowed” this all to happen have now set up a working party to review APC populated by the same people that backed APC resulting in this unfair and iniquitous position being established in the first place.
Lest we forget many of our forefathers laid down their lives for democracy, free speech, free choice and a free market economy. Plainly something that has been completely lost on a government, and its agency, that regulate by stealth and in an unfair and unreasonable manner.