Sunday, July 24, 2011

internet holiday companies - hand to mouth - atol / abta

Having a look at some of the fantastic deals for holidays in Egypt at the moment.

Are the offers 'too good to be true'?


The global recession and the increase in airline fuel and flight taxes, has meant fewer people travelling abroad.

The same number of package holiday companies are chasing a shrinking pool of customers.

The main questions that you should ask of any 'internet only' travel company:
  • Which charter company will be providing the flight?
  • Do you regularly rearrange flights within a month of departure date?
That second question is one which you will not ask the travel company directly. Do a bit of research and find out if, last year, folks had their travel dates moved, or flight numbers changed.

( Last minute rearrangements of charter, could be an indicator for problems meeting payment terms with Charter companies. )

Cash flow and travel companies living 'hand to mouth':

Last year it was the turn of Goldtrail. This year who knows.

Goldtrail was not a new venture, they had been in business since the late 90s!

When there are too many operators vying for that shrinking pool of business, the temptation is there to keep cutting costs, and offering even more competitive pricing.

So much so that the entire business can be put at risk!

It might sound appealing to be a customer 'chased' by these increasingly good offers, however there is another side to things.

Cutting all of the profit from the deal, can leave some of these travel companies with cash flow issues.

Did they already pay the charter company? Or is some of my flight cost just patching up cash flow issue?

It is entirely possible that companies with this sort of cash flow issue, might be living hand to mouth, and paying your charter flight from expected future business.

Atol / CAA / Abta protection - reality and myth:

In the UK the Civil Aviation Authority (CAA) / Atol might offer some protection for your flight.

If you book an Internet holiday and the company is using a UK charter company, then you might have some protection as hinted above, however this will be in the form of an 'after the fact' remedy.

In practice your name will be added to a list of customers suffering lost due to unpaid charters / lost flights. Months later, if successful, you might get some or all of the cost of the flight back.

Read up on Abta or Aito protection. It may offer some protection for the entire package, however that would probably only apply if the package was booked in the UK through a bricks and mortar travel agent (perhaps high street / retail park / town centre)

Notes and Further Reading:

Extract from the February 2006 article (link below)
ABTA has announced it will 'cease direct payments to consumers in respect of failure of member agents conducting retail activities when nothing has been booked by travel agents.'
Websearch the phrase "Package Travel, Package Holidays and Package Tour Regulations 1992" for some details, of the mandated regulations, regarding financial protection and package holidays.

In the UK Aito do offer some protection if your package is booked through an independent travel agent. See their website here.

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