ABTA urges urgent financial protection reform

The failure of XL Leisure Group has highlighted inconsistencies in financial protection arrangements for travellers when airlines and operators go bust.

ABTA chief executive Mark Tanzer called on the government to reform the structure of financial protection in the wake of the XL collapse.

“The failure of XL demonstrates the virtue of financial protection, and the hazards of travelling without it. We shall renew our call on government to address this issue as a matter of the utmost urgency,” he said.

Tanzer’s comments echo those of Thomson/First Choice managing director Dermot Blastland, who spoke out on the issue earlier today (See previous TravelMole story).

The ABTA chief said: “Because of the mix of its businesses, the failure of XL has highlighted inconsistencies in the arrangements for protecting passengers.

“Although the majority of XL customers bought package holidays and would therefore be covered under the ATOL scheme, thousands who booked directly on the XL.com website would have no statutory protection.

“The government has repeatedly rejected industry appeals for a universal system of protection that would cover all outbound flights.”

He added: “Ours is not the only industry to be affected by the economic climate, and I expect to see continued consolidation of travel organisers over the coming months – a process that started last year with the merger of the largest four tour operators into two.

“Although these pressures are severe, and will continue to be felt in the short term, underlying demand remains strong.

“The reduction in industry capacity that follows a failure such as XL may well work to the advantage of other tour operators. The travel industry has historically been proved itself resilient to external shocks such as this.”

Tanzer expressed his disappointment at the failure of a company of the scale of XL.

“Our immediate concern is for the welfare of stranded passengers and for passengers with future bookings. Our members, especially Thomson, First Choice, Thomas Cook and Virgin Holidays, are working very closely with the CAA to repatriate XL customers, and the mechanism for claiming refunds is up and running,” he said.

But ABTA warned that more people were booking travel that carried no come-back in the case of company collapse.

“The growth of the internet and the low-cost airlines has meant an increasing proportion of travellers are buying travel outside the scheme of protection.

“Until the situation is reformed and made consistent, we recommend that travellers buy package holidays from ABTA members, as these provide full repatriation and refund protection.”

by Phil Davies