The recriminations over the largest travel agency collapse in more than a decade started this week after Cruise Control went out of business on Monday leaving cruiselines and ABTA millions of pounds out of pocket.
Observers are asking why the company was allowed to continue trading after it collapsed owing £8 million. Cruise Control director Paul Moore dismissed as industry gossip claims it was working on single-digit margins and insisted the company could have been saved. “This business was 100% recoverable,” he said.
The collapse has left ABTA facing an estimated £5 million in claims. Cruise Control’s ABTA bond of £1.3 million will only partially cover the cost.
ABTA chief executive Mark Tanzer defended the association’s handling of the case, but said there may be lessons to learn. “We will look at the processes, make sure things were as they should have been and see if there is anything we can change. We don’t like to see members fail or having to pay out, but ABTA is here to make sure there is protection for consumers and members.”
After the difficulties emerged last week, Cruise Control bosses believed a £4 million rescue package agreed with venture capitalist Epic would save the company but it failed to win support.
The collapse has come as no surprise to industry figures who have criticised heavy discounting and volume-based commission structures which encourage retailers to give their margin away.
SAT Business Travel Management chairman Andrew Dickson said: “There was always a risk Cruise Control would go bust yet it took ABTA by surprise and it’s cost it a fortune. Who’s going to suffer? Agents who lost business as a result of Cruise Control undercutting them in the first place.”
Cruise Control instructed PricewaterhouseCoopers to put the firm, which had £100 million annual turnover and £50 million of forward bookings, into voluntary liquidation on Monday making all 250 staff redundant. It is the most costly failure since International Leisure Group went bust in 1991 owing £400 million.
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