By David Murphy, Business Correspondent
XL was the fifth travel company to collapse affecting Irish consumers this year.
Tour operators have told the aviation regulator that individual bonds paid by firms to fly people home when operators go bust should be pooled together to give additional cover to consumers.
Getting away for a break in the sun is getting that bit more difficult.
This summer five travel companies have ceased trading. On 11 July Fáilte Travel collapsed. On 28 July Galway's MacLaverty Travel ceased trading. On 26 Auguast Ronane Travel also says it could not honour bookings.
On 8 September Futura Gael stops trading due to problems with its parent company. And today XL Holidays' collapse is affecting 4,000 Irish people.
Following the collapse of Canada's Zoom two weeks ago a rescue package for Italy’s Alitalia fell apart today.
So why is it all happening now?
Seasonal factors
Joe Gill, Director of Research at Bloxham Stockbrokers, said part of the problem is linked to seasonal factors:
‘I think it’s because we’re at that time of the year where holiday travel is coming off its seasonal peak and the suppliers and providers to a number of airlines are very concerned about cash flows going into the winter.
‘That is triggering a series of collapses combined with the fact that fuel prices, even though they’ve come back in recent weeks, are still twice what they were three years ago,’ Mr Gill said.
People who have bought XL tickets will have to be reimbursed from a bond which is built up as tour operators and travel agents pay in 10% of their turnover. But in some cases it is not quite enough money.
In that case there is a separate fund to help out but it is limited. Now travel companies have also suggested all the bonds from individual firms should be pooled together to give additional protection.
Consumer caution
But after disappointment for thousands this summer how safe are tour companies?
Damien Mooney of the Irish Tour Operators Association said tour operators offer a reliable, reputable and long-standing level of service.
‘I don’t think anybody should be either anxious or nervous about travelling with ourselves, and more so to another element of our sector, whereby we are offering that bond,’ Mr Mooney said.
Rosaleen Quinlan of the European Consumers Centre urged prospective holidaymakers to choose their holiday carefully.
‘If you’re booking on your own with an airline and you’re not too sure about the airline or you have certain questions, then be very, very careful because there are huge problems in the industry at the moment,’ she said.
In this climate it is no surprise people want to get away.
- David Murphy
