Comment: The questionable legacy of the travel industry

Sharp practice in travel is mostly a thing of the past, yet regulators must remain vigilant says industry consultant Andy Cooper.

I was recently lucky enough to be invited to attend the launch of a new history of the package holiday. Looking round the 20 odd attendees who collectively represented between 750 and 1,000 years’ experience, and sharing anecdotes with that group, I was struck not only by the importance of individual entrepreneurs to the success of the industry, but also by the fine lines between entrepreneurialism and questionable behaviours.

I am not for a minute suggesting that anyone in that room crossed that line, but the history of the travel industry has been littered with examples of customers losing their holidays either by the company disappearing, or by a failure to deliver what had been sold to them.

This is probably inevitable in an industry where customers generally pay in full before they receive anything – sometimes many months in advance, and where delivery of the product is often at least partially dependent upon suppliers in another country doing what they had promised in a timely fashion.

The litany of questionable practices range from the top of the scale – deliberate “bust outs” where the holiday provider simply walks away with customer cash, through financial failures which might have been avoided, to the unbuilt hotels and artists impressions in brochures common in the 1970s and 1980s, through to the practices of surcharging customers for increased costs, but then doubling the amount by adding “Admin fees” on top.

Is it any wonder that when I first came into the industry almost 30 years ago, the Chief Trading Standards Officer at a large UK local authority in the UK stood up at a conference and said that he regarded travel companies as little better than second hand car salesmen? He could easily have called some in the industry snake oil salesmen, as the practices of selling something that doesn’t really exist were still commonplace at that time.

II previously chaired the Abta Code of Conduct Committee for two spells, it was noticeable that the cases dealt with in my second period at the end of the noughties was both considerably fewer and less serious than those 10 years earlier.

The industry has clearly tidied up its act over the intervening decades, and consumer protection massively strengthened – as well as there being a huge group of lawyers and claims companies waiting for the chance to exploit any failings. Yet the main conditions which led to some of the dodgy practices – early advance payment and delivery outside the control of the seller – still exist and the threat to our industry from those at the darker end is still there.

I suspect that these underlying issues, and the resulting mistrust of those in the industry has contributed to the general attitude of the public towards the airlines in relation to the way they have dealt with flight delay claims, there is no doubt that there is little or no public sympathy towards the airlines about the levels of compensation they are now forced to pay, even in relation to relatively short flight delays.

A four hour delay on a 14 night holiday might be irritating and inconvenient, but should the airline really have to pay back 50% or more of the holiday cost for that level of impact, as they are sometimes forced to do? I think that the public have an underlying suspicion that if not, someone is making loads of money at their expense.

No travel business has successfully made the case that profit margins in our industry are wafer thin and it doesn’t take much to go wrong for those margins to disappear entirely.

Even Ryanair, who are probably the shining lights of the industry made a profit of €1,242 million on 106.4 million customers equating to €11.67 (£9.26) per passenger, which isn’t massive – certainly not when you look at the underlying profitability of banks, phone companies or other service providers.

The problem that the industry faces is that this legacy of questionable practices continues to have some impact in the minds of our customers, although it doesn’t stop them buying holidays with ONS data showing total overseas visits by British citizens almost back to the highs of 2007/8.

But when problems do occur, they impact on confidence in the entire tourism sector. It’s very hard for travel companies to sell a message that you will be looked after if things go wrong, as it makes the customer realise that things might go wrong!

Largely as a result of this legacy, at least part of the industry is subject to a strong regulatory framework – and both the ATOL scheme in the UK and the wider EU Package Travel Directive are designed to protect consumers from the worst excesses of behaviour in the travel industry.

Unfortunately whilst this legislation is effective at making those who already behave well continue to do so, it can still be avoided: either legitimately, due to gaps in protection, or by less scrupulous businesses who deliberately choose to flout the law.

It’s not that difficult to set up an online travel business, market like mad, take bookings for a week, secure a big chunk of cash, and then disappear – although you would like to think that the banks and credit card providers would be able to reduce that risk.

So, whilst some of the more dodgy legacy of our industry, such as the unbuilt hotels, the dummy flights and non existent travel arrangements have passed into folklore, it is important to our continuing credibility that we don’t allow consumers to believe that they still have a risk of these experiences and the regulators need to come down firmly on all those who cross the line between entrepreneurship and illegality.

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