The expert view

Our consumer expert Nick Trend points out the gaps in holiday protection – and how to book a trip safely

The collapse of Low Cost Holidays a few days ago was, I’m sure, a shock to the 140,000-odd people who had booked with the company, or were actually on holiday with it at the time. But should it have been? After all, holiday companies have been collapsing since the package holiday was invented – with blanket media coverage on every occasion. Remember the names? Clarksons and Horizon in the Seventies; Intasun in the Nineties; and XL Leisure – which, when it went under in 2008, left 85,000 British holidaymakers stranded. Smaller operators collapse every year: only last week it was the turn of Turkey specialist Anatolian Sky.

So it seems strange that so many customers of Low Cost Holidays appear not to have realised that they were entrusting their money to a company that had no financial protection in place. It wasn’t a member of Abta or Aito and, crucially, because it was based in Spain, it had no Atol licence, which is the gold standard for holiday protection.

Surely we should have learnt by now that this is an industry with a record of financial failures and that it is therefore essential to check that you will be properly protected before you hand over the money.

Admittedly, that checking process is not always straightforward. While all package holidays offered by UK-based tour operators are protected (see our guide at telegraph.co.uk/atol), many bookings are not. Here is my guide to five of the key pitfalls. You can cover nearly all of them in one of two ways: by booking with a credit card (the card issuer is then liable if the purchase costs more than £100) or by buying travel insurance that covers financial failures (though some policies restrict the type they cover; check before you buy).

1. Most flight-only bookings sold directly by scheduled airlines are not protected. If the airline goes out of business, you may be stranded abroad, or lose the money you have paid in advance. However, airline tickets sold by reputable travel agents are covered under the Atol scheme. 2. If you book a hotel or car hire when you are buying a flight through an airline’s website, that may not be covered either. Some airlines, such as BA and easyJet, do protect bookings, but many others don’t. 3. Different rules apply to flights and accommodation booked through a UK-based travel company or website. These do have to be protected under Atol rules. But any travel bookings that are made with a company or website based overseas are not protected by Atol. 4. Trips that begin outside the UK do not fall under Atol rules. So if you book an excursion or trip with a foreign company and you make travel arrangements to get there separately, you will have no automatic protection under UK law. 5. Trips in the UK, and those that last less than 24 hours and do not include overnight accommodation, are not covered either.