The Air Travel Trust (ATT) has revealed that the number of failing tour operators has increased, and warned that yet more companies could collapse.

In its annual report for the year ending 31 March 2008, the ATT said that 25 companies protected by the Air Travel Organisers’ Licensing (ATOL) scheme had gone out of business in the last financial year.

The ATT, which administers a fund on behalf of the Civil Aviation Authority to refund and repatriate stranded holidaymakers when companies go bust, also said that its expenditure in the year up to 31 March had gone down by nearly £3m to £0.4m. The trust's overall deficit has increased £1m to £21m.

But although the ATT said that the levels of bookings reported since April had held up, it warned of an increase in the number of ATOL-protected companies failing in the same period.

Chair of the ATT, Roger Mountford, said: "While the current level of bookings for summer 2008 is broadly in line with forecasts, the signs for 2009 are less clear cut. An increase in the number of insolvencies is an indicator of tougher trading conditions and may be an indication of a further deterioration later this year."