The Government is proposing controversial reforms to the ATOL scheme, which are to take effect from January 2012, subject to an interim consultation. It is intended that the reforms will offer better protection for consumers who book their flights and accommodation separately.

The introduction of a 'flight-plus' category holiday is welcomed by consumer groups after the collapse of various high profile holiday companies, which left British holidaymakers stranded abroad.

The proposed changes should also provide greater consumer certainty with the onus placed on travel businesses to inform a holidaymaker if a dynamic package arrangement falls outside the revised ATOL scheme.

Subject to proposed secondary legislation, the 'flight-plus' purchases would also fall within an extended legal definition of a package holiday; thus effectively bringing 'flight-plus' type holidays within the parameters of the Package Travel Regulations.

The latest proposals will no doubt be of great interest to the European Commission as it continues its review of the current version of the Package Travel Regulations.