Endacott issues tsunami warning to agents

Saturday, 20 Jan, 2011 0

Never one to shy away from telling it how it is, On Holiday Group CEO Steve Endacott shares his views on the CAA’s proposed new protection legislation, Flight Plus:

"Online and independent agents have never faced such a hidden and potentially disastrous regulation reform as Flight Plus. If this were allowed to pass as originally proposed, any collapse of a charter, scheduled or low cost airline would wipe out 50% plus of retailers

In essence, this change would allow the CAA to neatly side step their requirement to protect customers’ money and pass the liability straight to any ATOL holding retailer.

Under current ATOL rules, any retailer holding an ATOL licence will be deemed to have brought seats from a charter airline on an ATOL to ATOL basis and hence any collapse would require them to replace the flights at their cost. Many retailers already suffered at the hands of this rule during the XL collapse, which cost the Coop Travel £2m alone in replacement seats. However, the new scheme would mean low cost and scheduled flights would have to be bonded by dynamic packaging retailers, thereby greatly increasing the risk.

Although retailers can currently cover this risk by taking our specialist insurance policies such as Supplier Failure Cover or SAFI, the market for these products has dramatically shrunk since the collapse of Kiss and Goldtrail, leaving only two players in the market. Already costs are escalating and another collapse could easily see this market disappear leaving agents completely exposed.

Not only is Flight Plus dangerous to retailers, it still does not deal with the fundamental imbalance in that airlines do not need to hold ATOL licences, even though in most cases calls on the ATOL scheme are triggered by airline collapses. How can it be reasonable that retailers need to hold licences to protect consumer monies when BA, which lost £980 million last year, does not?

The CAA is actually run by sensible and fair minded people, but they have a pressing need to refill their coffers after more airline collapse this summer. They openly admit to having given up in the short term on persuading the Government to take on airlines which have strong lobbies and hidden perks to offer (just check out how many MPs have Gold cards!!!). Therefore, they have been forced to push ahead with the dangerous fudge that is Flight Plus.

I can understand the CAA’s position, but I am frankly amazed that online and independent retailers are not up in arms. The only conclusion you can reach is that they have simply not seen the tsunami which may wipe them from the face of the industry."

* Do you share Endacott’s views? How will Flight Plus impact your business? What should the CAA do to protect customers? Is there a solution?

Share your views by clicking on ADD A COMMENT below.

Dinah

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