The recent demise of the XL Group, a major UK travel company with its own airline and trading under established brands such as Kosmar and Medlife Hotels is an unnerving event for all holidaymakers. With over 20 airlines ceased trading in the past year, how can we be sure that we will not be placed in a similar situation of loss when we book with any travel company or airline?
It is interesting that the statement on the XL group's website said: "The companies entered into administration having suffered as a result of volatile fuel prices, the economic downturn, and were unable to obtain further funding." In a comment from rival holiday firm TUI, it is clear that the industry mandarins are warning that due to rising fuel prices, and less money available from banks due to lending restrictions brought on by the credit crunch "airlines with less than robust business models" - such as XL - were now failing. Clearly the mandarins of the bigger holiday companies are clear that their business models are indeed robust, and we should believe them of course.
But clearly, company size is not everything - XL was actually the 3rd largest operator in the UK - and so it is important always to understand what financial protection is available in the event that the worst happens and your holiday company fails.
In the UK, the Civil Aviation Authority oversees the ATOL licensing system whereby any operator or airline offering holidays by air pays into a bonding scheme based on its business turnover. Funds thus generated are used to repatriate holidaymakers, or refund money paid in advance for such bonded holidays. It seems even more important in these difficult times, to make sure that you ensure every element of your holiday is ATOL protected.
However, it is important to know that this scheme is no a "catch-all", when a holidaymaker has booked a "flight only" or a flight and accommodation separately. In the XL demise, it is estimated that more than 10,000 people were not ATOL protected because they booked separate flights and accommodation or flights only. In these days of do-it-yourself holiday packaging via separate bookings via the internet, this situation is unlikely to improve unless legislation changes.
Many consumer rights groups are vociferous in their demands that the Government should take steps to ensure all holiday companies must belong to the ATOL scheme, which offers package holiday makers financial protection. However, it is difficult to see how a scheme run via the Civil Aviation Authority should be able to cover elements of a holiday such as hotels which are purchased separately and are not in an "Aviation" remit.
Because such "Do-It-Yourself" holidays aren't protected by the ATOL scheme, it is important to think about alternative protection. Examples are:
Book with a credit card: But be careful here, because you still might not be covered. You must spend at least £100 on each element of the holiday - and charge cards or debit cards do not offer any protection.
Take out travel insurance: Look for policies which cover against holiday company or holiday provider insolvency. However, it is vital to check the small print, as many policies don't include this cover.
And also remember the important fact that you can only be covered for the component of your holiday that's gone out of business. You can't claim for the others and so you will need to rebook the missing element - possible at a higher price, or possibly with difficulty of any availability at all.
Sometimes, it seems much easier to book a complete package supplied by a single ATOL bonded operator - but taking these few small steps will at least ensure you have the same financial protection outside the scheme, even if you are more "on your own" in the event of a business failure.
It is interesting that the statement on the XL group's website said: "The companies entered into administration having suffered as a result of volatile fuel prices, the economic downturn, and were unable to obtain further funding." In a comment from rival holiday firm TUI, it is clear that the industry mandarins are warning that due to rising fuel prices, and less money available from banks due to lending restrictions brought on by the credit crunch "airlines with less than robust business models" - such as XL - were now failing. Clearly the mandarins of the bigger holiday companies are clear that their business models are indeed robust, and we should believe them of course.
But clearly, company size is not everything - XL was actually the 3rd largest operator in the UK - and so it is important always to understand what financial protection is available in the event that the worst happens and your holiday company fails.
In the UK, the Civil Aviation Authority oversees the ATOL licensing system whereby any operator or airline offering holidays by air pays into a bonding scheme based on its business turnover. Funds thus generated are used to repatriate holidaymakers, or refund money paid in advance for such bonded holidays. It seems even more important in these difficult times, to make sure that you ensure every element of your holiday is ATOL protected.
However, it is important to know that this scheme is no a "catch-all", when a holidaymaker has booked a "flight only" or a flight and accommodation separately. In the XL demise, it is estimated that more than 10,000 people were not ATOL protected because they booked separate flights and accommodation or flights only. In these days of do-it-yourself holiday packaging via separate bookings via the internet, this situation is unlikely to improve unless legislation changes.
Many consumer rights groups are vociferous in their demands that the Government should take steps to ensure all holiday companies must belong to the ATOL scheme, which offers package holiday makers financial protection. However, it is difficult to see how a scheme run via the Civil Aviation Authority should be able to cover elements of a holiday such as hotels which are purchased separately and are not in an "Aviation" remit.
Because such "Do-It-Yourself" holidays aren't protected by the ATOL scheme, it is important to think about alternative protection. Examples are:
Book with a credit card: But be careful here, because you still might not be covered. You must spend at least £100 on each element of the holiday - and charge cards or debit cards do not offer any protection.
Take out travel insurance: Look for policies which cover against holiday company or holiday provider insolvency. However, it is vital to check the small print, as many policies don't include this cover.
And also remember the important fact that you can only be covered for the component of your holiday that's gone out of business. You can't claim for the others and so you will need to rebook the missing element - possible at a higher price, or possibly with difficulty of any availability at all.
Sometimes, it seems much easier to book a complete package supplied by a single ATOL bonded operator - but taking these few small steps will at least ensure you have the same financial protection outside the scheme, even if you are more "on your own" in the event of a business failure.
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