What ATOL protection covers on a package holiday, and what it leaves out

Two holidays can look the same on a booking screen and be protected in quite different ways. Whether a flight is included, and who sold it to you, decides which rules apply.

Booking a week in the sun often starts with a search for flights and ends with a hotel, a transfer and perhaps a hire car added along the way. The order in which those pieces are bought, and from whom, makes a real difference to what happens if the travel company goes out of business before or during the trip.

In the UK two sets of rules do most of the work: the Package Travel and Linked Travel Arrangements Regulations 2018, and the Air Travel Organiser’s Licence scheme, known as ATOL, run by the Civil Aviation Authority (CAA). This article explains how they fit together.

What counts as a package

Under the 2018 Regulations, a package is a combination of at least two different types of travel service for the same trip. The types are transport, accommodation, car or motorbike hire, and other tourist services. The combination is a package when, for example, one trader puts it together, it is bought from a single point of sale, it is sold at an inclusive or total price, or it is advertised as a package.

Some bookings made on separate websites can also form a package. If you book one service and the first trader passes your details to a second trader, and you book with that second trader within 24 hours, the regulations can treat the two as a package.

A flight and hotel booked together through one travel company is therefore usually a package. A flight booked with an airline and a hotel booked a week later on a different site is usually not.

The organiser’s responsibility

For a package, the organiser is responsible for every travel service in it, whoever actually provides them. If the hotel is not as described or a transfer does not turn up, your claim is with the organiser, not with each supplier separately.

The organiser must also have insolvency protection. If it fails, that protection has to cover refunds for services not yet provided and, where transport is part of the package, getting travellers home and housing them until then. For packages that include a flight, the regulations leave this to ATOL, because ATOL already provides it.

What ATOL adds

ATOL protects package trips that include a flight and are sold by UK businesses holding an ATOL. If the ATOL holder fails, the scheme aims to make sure that:

• if you are already abroad, you can finish your trip and stay in your accommodation where possible, and get home;
• if you have to pay again for accommodation or travel to complete the trip, those costs can be reimbursed;
• if you have not yet travelled, you can claim back the money you paid.

When you book, you should be given an ATOL Certificate. It lists what is protected and states “Who is protecting your trip?”. If the firm fails, claims should be made within 12 months of the failure.

The scheme is funded partly through the ATOL Protection Contribution, £2.50 per passenger, which the ATOL holder pays into the Air Travel Trust. The CAA says it must not be shown to customers as an extra charge.

The ATOL Certificate is the one document that says, in plain words, who is protecting the trip.

What ATOL does not cover

ATOL is protection against a travel firm failing. It is not travel insurance and it does not deal with ordinary disputes. According to the ATOL scheme itself, it does not cover:

• flights bought directly from an airline, where you hold a valid e-ticket;
• flight cancellations or delays;
• complaints about the holiday where the firm has not failed;
• medical costs or illness abroad.

Illness, cancellation for personal reasons and lost luggage are matters for travel insurance. Travel insurers are financial firms, so the FCA Register is the place to check one you have not used before.

Four ways to book, compared

A simplified overview. The exact position depends on how each booking was made; the ATOL Certificate or the booking terms say which applies.

A linked travel arrangement sits between a package and separate bookings. Each provider is responsible only for its own service, and the protection is limited to money the trader received and, if it was carrying you, getting you home.

What changes from April 2027

New regulations amending the 2018 rules (SI 2026/455) were made on 22 April 2026 and come into force on 6 April 2027. They are law but not yet in force, and they do not apply to bookings made before that date.

The main changes are that linked travel arrangements are abolished as a separate category, so more combinations of separately booked services for a single trip are treated as packages, and that suppliers have to refund organisers within 14 days in certain cases. Holidays booked now continue under the current rules.

Who this matters for, and what to check

This matters to anyone booking a trip with more than one element, particularly when paying a deposit months ahead or a balance in one sum. Before and after booking:

• check whether the booking is sold as a package and whether a flight is included;
• for a flight-inclusive package, look for the ATOL number and the ATOL Certificate;
• for a package without a flight, ask how the organiser’s insolvency protection is arranged;
• arrange travel insurance separately for illness and cancellation;
• when paying a balance by bank transfer, read the name check result, as our guide to Confirmation of Payee explains.

If the holiday fund is sitting in a fixed-term savings account until the balance is due, our article on which tax year bond interest counts in covers the tax side.

The short version

A package bundles at least two travel services for one trip, and its organiser is responsible for all of them and must protect your money against insolvency. For packages with a flight sold by UK firms, that protection is ATOL: shown on the ATOL Certificate, claimed within 12 months of a failure, and covering refunds or getting home. ATOL does not cover flights bought direct from an airline, delays or illness. New rules from 6 April 2027 will treat more separate bookings as packages.