Monarch, the airline that was on the brink of collapse two months ago, has been allowed to stop offering Atol cover on flight-only bookings from the UK.

The protection, which costs £2.50 per person, ensures that passengers get a refund if an airline goes bust, and are repatriated free of charge if the firm collapses while they are abroad.

The move will make Monarch flights slightly cheaper in a ferociously competitive market.

Package holidays sold by the airline continue to be covered by Atol. It was insisted upon by the Civil Aviation Authority (CAA) at the time of Monarch’s sale to Greybull Capital in 2014. In late September 2016, when the carrier’s licence was coming up for renewal, the CAA was so concerned that Monarch might fail that it set up a “shadow airline”, with chartered jets in place to bring passengers home in the event of a collapse.

In a statement, the airline said: “This is a clear sign of our financial stability.

“No other UK scheduled airline Atol protects flight-only bookings. After two years of being the exception, Monarch is now the norm.”

At the same time as the Atol requirement ends, the airline will drop credit-card charges of up to 3 per cent.

Ian Chambers, Monarch’s Chief Commercial Officer, said: “Our customers can get the best value from their flight and holiday bookings – and benefit from the protection that credit cards offer, without having to pay extra for it.”