The travel industry has changed significantly over the past decade. The internet has revolutionised the way people research and book trips abroad.
But consumer protection laws have failed to keep pace with these developments - leaving thousands of holidaymakers vulnerable if their tour operator or travel agent goes bust.
That is why - subject to consultation with the travel industry in the spring - I have announced plans to reform the Air Travel Organisers' Licensing scheme. We estimate that the proposals could mean around six million more holidays will receive protection in the event of an insolvency
The main proposal is to extend customer protection to include Flight Plus - trips that comprise separate flights and accommodation or car hire, sometimes called 'dynamic packages'. Essentially, these look like package holidays, but fall outside the existing legal definition which means they are not currently covered by the ATOL scheme.
We also want to ensure that customers are provided with a clear explanation of their protection at the point of sale, so they can make informed decisions about their holiday.
We are therefore proposing to replace the various documents that are issued with standardised information for travellers. Progress on this is already under way, with the Civil Aviation Authority and the travel industry working to develop a recognisable certificate for protected holidays.
If businesses aren't completely straight with customers about their level of protection, this can have a negative impact on the reputation and professionalism of retail travel industry as a whole.
Some companies offer holidays which might look like packages but make the transaction as an "agent for the customer" without explaining to the customer that this means forfeiting ATOL protection. Customers should get a clear and honest explanation so they can choose with their eyes open. There are already regulations which prohibit misleading marketing and omissions, and we'll be working to ensure these are applied in this situation.
I agree with David Mortimer, Chairman of the Association of ATOL companies, who recently wrote on the TTG Live website: "We enthusiastically welcome proposals to enhance ATOL. Anything that makes the regulations clearer in explaining the protection consumers have must be what all conscientious agents and operators want."
At the same time, we need to consider how best to stabilise and secure the long term financial sustainability of the scheme's finances. So our proposals will also help reduce the deficit in the fund which covers refunds and repatriation after an insolvency.
After the failure of companies like Goldtrail and Kiss last year, and a recent court case which compounded the confusion for consumers about which holidays are protected, there is now a clear case for reform. Indeed, this represents the biggest overhaul to the ATOL scheme for more than a decade.
Subject to the consultation I expect the proposed changes to be implemented by the end of this year. But I hope the travel industry will get involved with the consultation when it is published, and make its views clear on how we might best extend ATOL protection - so we can give customers the protection and peace of mind they need.