Holidaymakers who book trips online could get new protections so they are not left stranded abroad or lose money if their travel firms go bust.
New legislation would ensure the Atol protection scheme extends to passengers who books flights, hotels or car hire not sold as part of a package holiday, covering a gap in the internet travel market and matching standards expected on the high street.
The measures form part of the first Bill which will be debated in the Commons since the Queen’s Speech.
Prime Minister Theresa May said: “This Government is committed to making our country fairer by ensuring consumers have the protections they deserve both online and offline.
“Technology has transformed the way people book holidays, and this Bill will mean the Atol scheme can keep pace both now and in the future.
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“Whether you book a well-earned getaway on the internet or the high street should not make a difference to knowing you won’t be stranded or left out-of-pocket if something goes wrong.”
From 2018, when holidaymakers book a flight and are then directed by the airline to a separate company to book accommodation within 24 hours, the holiday will be covered by a Government protection scheme.
Atol was set up to protect consumers against travel companies going bust.
By law, all companies selling package holidays which include a flight must pay into a pot that can refund people who lose their holidays or, if needs be, bring them home if they are abroad when a company folds.
The Abta Holiday Habits Report 2016 found more than three-quarters of UK consumers now book their holidays online.
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Transport minister John Hayes said: “Atol was set up for good reason - we go on holiday to relax, not worry about ‘what ifs’.
“But people who buy their flights and hotels separately sometimes miss out on the protection, and peace of mind, that comes with this protection.
“This change will make the law fit for the modern age - and better able to adapt to any future advances in the technology that people use to book their getaway.”
The measures in the Bill allow the Government to set up separate funds for different types of holiday product and booking method, to provide greater flexibility.
The Air Travel Organisers’ Licensing Bill will get its second reading in the Commons on Monday.