What a bad year it has been for travellers and travel companies. First the Icelandic ash cloud, strikes, bad weather and now the recent collapse of three travel companies. But what can be done to stop these failures and protect travellers from the hassle?
The news that London-based travel company Flight Options Limited, trading principally as Kiss Flights, ceased trading caused much discussion in the press as it was the third company to go bust in a month.
First on 16 July Goldtrail Holidays went bust, then on 12 August Su- 4-U Holidays Limited ceased trading.
This brings the total companies that have gone bust so far in 2010 and covered under the Air Travel Organiser’s Licensing (ATOL) to thirteen.
All tour operators selling flights and air holidays must hold a licence from the CAA. If a Licence holder fails, the CAA is responsible for ensuring customers are either repatriated to the UK or receive a refund of payments made.
Repatriation costs and refunds are met by the Air Travel Trust Fund, the funds of which come from a £2.50 per person contribution, called the ATOL Protection Contribution (APC), each licence holder is required to make when it accepts a booking under its ATOL.
In some circumstances, such as with Kiss, a licence holder will have also provided a bond, which is used in the first instance to protect customers.
According to the CAA the 1 million GBP bond held to cover Kiss will not be enough to cover the cost or refunds and repatriation in total (source www.ttglive.com).
That is leading some holiday industry commentators to suggest that the passenger contribution to the APC should be increased.
But should passengers foot an additional bill for these business failures or should ATOL start to monitor their licence holders more closely and provide early intervention if a company is living beyond its means?
Just like the banking crisis of two years ago this could be the right time for reform, to weed out the companies that are chancing their arm and get the travel business on an even keel.
The collapse of XL Airlines two years ago should have been the turning point but that lesson seems to have been lost.
Some commentators are suprised that these companies have gone bust right in the peak holiday season when the cash should be rolling in.
But if these companies have gone bust in the peak season how many more are holding on by their finger tips and just waiting for the inevitable as cash runs dry towards the end of the season?
At the moment there is no way of telling so air passengers and holiday makers will just have to keep their fingers crossed that it won’t be ‘them’ on the receiving end of being being booted out of their hotel and sleeping rough in an airport while they wait to be ‘repatriated’.