Cheap flights may become harder to get and package holidaymakers face a new threat of surcharges as the travel industry moves to limit damage from threatened bankruptcies in the aftermath of September 11.

Travellers buying cut-price British Airways tickets from agents specialising in low fares are having to fork out the full amount within two weeks instead of paying a deposit and settling the balance closer to departure. But the airline is out on a limb. With passengers nervous about committing themselves too far ahead, it risks losing business to rivals unless they follow suit. If the shift away from BA makes a serious dent in its revenues, it will have only two choices - either to abandon its move or to press for a major change in consumer protection.

At present, airlines can sign agreements to bail out travellers if cheap fare specialists - known as consolidators in trade jargon - go bust before issuing tickets. The reason BA is demanding that consolidators hand over payments earlier is that it fears getting stuck with a huge bill if that happens.

One solution would be for the Civil Aviation Authority to require consolidators to arrange their own financial guarantees instead of getting them from the airlines. Dave Simmonds, managing director of Quest Travel, says: "It could increase fares by 5-10%, assuming firms could get cover. But at present insurers are running away from such risks - so some consolidators might have to throw in the towel."

The problem has arisen as the Association of British Travel Agents also tries to reduce the risk of failures - by persuading the government to relax the law limiting package tour firms' ability to impose surcharges.

At present, operators must absorb any extra, unforeseen charges up to 2% of the basic package. Since the rule was imposed a decade ago, surcharges have been rare. But tour firms argue that they now face sudden demands for higher security and insurance charges. They want the rule removed, at least temporarily, so that they can pass on those costs to their customers.

Operators fear that if they are forced to swallow such charges, their already thin profit margins could be wiped out and some could go out of business. If they get their way, they will introduce the change in the next editions of their summer brochures.

One small comfort for high street travel agents is that more people are buying their travel insurance. The 900 strong Advantage consortium says about 70% of customers are now opting for its policies, compared with around 30% before the terrorist attacks on America. The consortium is currently working out a deal with its insurance company that will enable all members to offer cover against the collapse of scheduled airlines.