Two people travel to Crete on the same date to the same hotel. One booked a package holiday with a tour operator. The other found a cheap flight and then independently found a hotel offer in a different window. A week before departure the airline or hotel goes bust. The two people’s next weeks are about to be very different. The difference has arisen by virtue of the package holiday regulations, ATOL and a number of lines of small print that few people actually read. Here we set out the rules, explain what they actually say, what they cover and where there are gaps. We also outline what you should check prior to parting with your cash.

What counts as a package holiday

The word package in law means more than just ‘flight plus hotel’. In law a package is made up of at least two different kinds of travel services for one trip, for example transport, accommodation, car hire or other services which tourists use such as excursions and event tickets. These services become a package when they are sold by one trader at an inclusive price, when they are advertised as a package or when they are selected as part of a package from one retailer and booked there and then. There are exceptions for very short trips under 24 hours that do not include an overnight stay.

The practical test is fairly simple. If one retailer has put together your holiday and you have paid one retailer for a number of components for the total price of the holiday then it is almost certainly a package. If you have put together your own trip from a variety of retailers then it is almost certainly not a package. The whole holiday is treated as one product by the law.

The Package Travel Regulations 2018 in brief

Packages sold from 1 July 2018 are covered by the Package Travel and Linked Travel Arrangements Regulations 2018. These regulations were introduced as a result of a European Directive from 1990 first implemented into UK law in 1992. Although the UK has left the EU these regulations remain in force. Essentially the idea remains the same – the party who organises and sells a package holiday is responsible for the entire product, including elements they have commissioned from suppliers (hotels, airlines, coaches etc.).

Changes are already on the way. Amendments to the existing regulations made in 2026 that come into force on 6 April 2027 get rid of the concept of “linked travel arrangements” and change the definition of a package to include situations where a trader helps customers purchasing separate travel services in one visit to their website or shop. After that date, more click-through purchases will receive full package protection.

ATOL protection: what it covers and how to check

ATOL is short for Air Travel Organisers’ Licensing. ATOL is a scheme operated by the Civil Aviation Authority. Air Travel Organisers’ Licensing has existed since 1973. When you book a package holiday from a UK business that includes a flight, ATOL protection applies. This protects customers of ATOL licensed sellers in the event that the seller fails. This can allow customers who are abroad to complete their holiday and return home. Customers who have not yet departed will have their monies refunded.

Two common misunderstandings about ATOL protection are: 1) ATOL protection does not include travel insurance cover for medical expenses or lost bags, 2) A plain flight booked directly with an airline is not ATOL protected if you receive a ticket straight away. However when you book an ATOL protected holiday you should receive an ATOL Certificate which names the company that will be protecting you. No certificate is a reason to ask questions. You can also check out the company before you book on the CAA’s check an ATOL search facility.

ABTA membership vs ATOL

ABTA and ATOL are two separate entities that get frequently mentioned together. ATOL is a government-run licensing scheme for trips that include flights, while ABTA is a trade association for the travel industry. It has a code of conduct that its members adhere to, and offers financial protection for non-flight packages such as coach tours and self-drive itineraries with ferries, as well as offering help when things go wrong via a formal disputes process.

A package with flights should be ATOL protected whether or not the retailer is a member of ABTA. Non-flight packages need some other form of protection, and the retailer’s membership of ABTA is one common way of providing their customer’s protection. The logo on the website is a starting point; the evidence is a certificate or written confirmation by the retailer of their customer’s protection.

What happens if your travel company goes bust

Britain learnt this the hard way. When the Court Line group and its holiday arm Clarksons collapsed in August 1974, tens of thousands of holidaymakers were left stranded abroad. Since then all package holiday companies have had to have some form of insolvency protection in place. This means that if a company goes bust before you travel you should get a refund. If it goes bust while you are abroad you should get help to return home and where possible continue your holiday.

For flight packages that protection is ATOL. The CAA website contains a number of guidance notes regarding the process of individual claims following the collapse of a holder. For other types of package the protection can be provided via a bond, via insurance or by holding customers’ money in trust, often arranged through a body such as ABTA. If you have booked individual components yourself then none of the above applies. You need to refer to the individual suppliers’ terms and conditions and look to any card protection that you may have plus your travel insurance, and check if it includes supplier failure cover.

Changes, cancellations and price rises

After you have booked, a tour operator can only increase the price of a package holiday if your contract allows it. Price increases are only permitted in respect of fuel, certain taxes and charges and currency exchange rate variations. Organisers must notify you of any price increase at least 20 days prior to departure and must provide a clear explanation of how it is calculated, and the contract must also allow a reduction in price where costs fall. However, if any price increase exceeds 8% of the total price of the holiday, you will be entitled to a full refund of the holiday price if you cancel.

This right also applies where the organiser has to make a major change to a principal part of a holiday package such as the destination, accommodation or departure date. You can accept the change, accept an alternative holiday offered by the organiser or cancel and receive a full refund of your holiday price. You will receive a full refund of your holiday price if the organiser cancels your holiday. You may be required to pay a reasonable termination fee if you cancel your holiday, however. Where, however, unavoidable and extraordinary circumstances, such as a natural disaster or serious unrest, occur at the destination and seriously affect the holiday being provided, then you will be able to cancel without paying any fee and receive a full refund of your holiday price prior to departure.

When things go wrong on holiday: complaints and compensation

The organiser is responsible for all parts of your holiday package. Should any of the local suppliers (e.g. hotel, transfer company) fail to meet the terms of your contract, you must report the failure as soon as you can to your holiday rep, or the organiser’s emergency contact line, preferably in writing. The organiser must then resolve the failure within a reasonable time frame, unless it is not possible to do so or the proposed solution would be disproportionate in terms of cost.

Where the service of an organiser fails, and the failure cannot or will not be put right by the organiser, the consumer may claim a price reduction for the time for which the service was not provided as agreed and compensation for any resulting damage. Consumers should keep photographs, receipts, and a record of who they spoke to and when, and, once back home, complain to the organiser first. If that goes nowhere, many travel companies are members of an approved dispute resolution scheme; as a last resort consumers may use the small claims court for amounts below the court’s maximum.

Flight-only and DIY holidays: what protection you lose

While booking flights and apartments separately can cost less and give you more flexibility, you are generally flying without protection outside of airline passenger rights for flights, and if the apartment falls through, that isn’t the airline’s problem. So while you can use travel insurance with supplier failure cover, the protection of a package is not available to you.

Using a credit card to pay for travel online also has its advantages. Section 75 of the Consumer Credit Act 1974 protects consumers who pay by credit card for goods and services costing more than £100 and up to £30,000, and means the card provider can be jointly liable if the supplier has collapsed. However, debit cards do not have the same protection, although chargeback may offer some limited protection. Good quality travel insurance that includes supplier failure in the policy cover is another way to offer some protection when booking travel online.

Travel insurance: what it adds that ATOL does not

ATOL and the package rules cover you when the travel company fails. Travel insurance covers you when life gets in the way. The main part of travel insurance to look for is the medical cover whilst abroad – treatment and repatriation can cost a lot more than the actual holiday.

It’s best to buy travel insurance when you book your holiday; this way the cancellation cover starts from the date of purchase, not the week before you travel. Make sure to read the exclusions and declare any medical conditions prior to purchase. Also check what the policy will cover should you travel against Foreign, Commonwealth and Development Office (FCDO) advice as many policies will refuse to pay out in these circumstances. The government advice is to purchase insurance that will cover you for your intended travel plans before you go.

GHIC and EHIC

The UK Global Health Insurance Card (GHIC) has replaced the European Health Insurance Card (EHIC) for the majority of people. GHIC allows individuals to receive necessary state healthcare in the European Economic Area (EEA) and in some other countries or territories, and this will generally be provided on the same basis as people from that country, which may be free or may mean you pay the same as a local. Existing EHIC cards are still valid until their expiry date. GHIC is free to apply for on the NHS website and there are many unofficial websites that charge to apply for a GHIC on your behalf – these should be avoided. GHIC is not an alternative to travel insurance. It does not cover private healthcare, mountain rescue or repatriation.

Checklist: protection checks before you book

• Is it a package? One company, one price, at least two travel services.
• If it includes a flight, does the company hold an ATOL? Check the CAA search.
• Will you get an ATOL Certificate, or written proof of other insolvency protection?
• Pay by credit card where you can, especially for trips you put together yourself.
• Read the price-change and cancellation terms before you pay.
• Buy travel insurance at the time of booking and check it covers supplier failure and your medical conditions.
• Check FCDO travel advice for your destination.
• Pack your GHIC or valid EHIC, and keep copies of every booking document.

Package holiday regulations: FAQ

Is a flight and hotel booked on the same website a package?

Often yes, if they’ve been sold together for one price or picked from the same business before you paid. If you’ve been transferred to a separate company to book a hotel after you’ve booked your flight, it may only be a linked travel arrangement and offer much weaker protection. Many of those single-visit bookings will be treated as packages from 6 April 2027.

What does ATOL protection actually cover?

This will cover you should the ATOL holder who sold you your flight-inclusive holiday go bust. This means that if you have not yet travelled you will receive a refund. If you are abroad when the ATOL holder goes bust you will be helped to complete your holiday and return home. However, this does not include cover for medical expenses, lost luggage or flight delays.

Can a tour operator increase the price after I’ve booked?

This must be allowed by the contract and only applied for fuel, certain taxes and charges and currency fluctuations. The price increase must not be applied within 20 days of departure and you are allowed to cancel for a full refund if it does exceed 8% of the total cost of the holiday.

Do I need travel insurance if my holiday is ATOL protected?

Yes. The ATOL protection only covers the failure of the travel company, not the other travel-related problems. That is covered by your insurance, which will also cover you against illness, injury or cancellation due to personal reasons and loss of items.

What’s the difference between EHIC and GHIC?

The GHIC replaced the EHIC for most UK residents. EHICs are still valid until they expire and then can be replaced for free by a GHIC for travel to the EEA and some other countries and will allow access to state-provided healthcare during your visit.