The APC levy may stop being flat. Prepare the data now
The direction of travel is toward a levy that reflects risk and booking value, and toward evidence that customer money is protected. The business that can show that evidence is in the strongest position.
What has been proposed.
The CAA began consulting on ATOL reform in April 2021. The consultation responses point towards a variable levy in place of the flat fee. The CAA has put forward three ways to make the levy variable.
Risk based pricing
A risk calculation at renewal, similar to the way insurers and bond underwriters set premiums.
Value of booking pricing
A levy set as a percentage of the booking value, or in bands, so higher value bookings pay more.
Hybrid pricing
A mix of risk and value. This is widely seen as the fairest option, but it adds complexity and may reduce transparency.
What the CAA appears to prefer.
The clearest signal in the reform discussion is a preference for segregation of funds, or for evidence that funds are used properly. Protection arrangements that release funds in a controlled way may be rewarded through a lower levy.
Full segregation until travel
Trust segregation until the return date, with no release of funds before travel.
Evidence of appropriate use
Auditable client accounts and data that shows how funds are protected, whether or not a trustee is involved.
What to prepare now.
The reform outcome is not settled. The preparation is the same whichever model is chosen: be able to show, booking by booking, where customer money is and how it has been protected.
Data on travelled and untravelled bookings
Payments for travelled and untravelled bookings in a format that can be shared easily, which helps you test the APC rate you would pay under a variable model.
Connected evidence before renewal
Renewal evidence connected to the booking as payments arrive, so the business is ready whatever the reform outcome.
See how this works around your bookings.
Bring one payment, reporting or cash-position problem. We will show how felloh connects the booking-level money trail behind it.
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