This information should be interesting for travelers based in UK. By law, every UK travel company which sells air holidays and flights is required to hold Air Travel Organiser’s Licence (ATOL).
ATOL was first introduced in 1973, but in recent years, there have been significant changes in the way that holidays are sold. Principally as a result of the Internet. As regulations were written prior to these develompents it has led to confusion for both consumers and the industry, as such changes were needed to bring ATOL into line with recent changes to holiday booking processes. As a result, changes were made to the ATOL scheme in April 2012
ATOL provides financial protection for consumers in the event of their ATOL holder going out of business, however, the number of holidaymakers that are ATOL protected has reduced considerably in the last few years due to changes in the ways holidays are sold. The ATOL reform is intended to ensure that more air holidays are financially protected.
A certificate will be provided at the time you book your holiday, this will detail whether your booking is a package, flight only, or flight plus. You will also see specific details about your booking on the certificate, for example the number of people travelling, flight details etc.
On the CCA website you can check an ATOL of a company against their database.
Wanderforth provided very nice infographics below to make it easer understand how it ATOL works: