The failure of Tapestry Holidays last August could result in an investigation after it came close to collapsing the consumer protection system .
A £2.5 million claim was made on the Air Travel Trust Fund in addition to payments covered by the company’s £1.7 million ATOL bond.
The payout to repatriate and refund clients would have pushed the fund beyond its guaranteed overdraft if the Government had not agreed to extend this from £18 million to £30 million.
The Air Transport Insolvency Protection Advisory Committee, which advises the Civil Aviation Authority and transport secretary Ruth Kelly, reported this week that the fund stands more than £20 million in debt – a £4 million rise on last year.
Almost £900,000 of this is due to interest payments on existing debt and most of the remainder to Tapestry, whose assets were subsequently bought by the Travelzest group.
ATIPAC chairman John Cox said the discrepancy between Tapestry’s bond and the total £4.2 million payout “would certainly need to be investigated”. However, the process of paying clients could take two years and would have to be completed before any investigation.
The biggest failure of the year involved HCCT (Holidays) – one of the top 40 ATOL holders, whose bond was called in December – but the £5.1 million payout remained below the company’s £6.9 million bond. The number of failures was two up on last year at 27.
Cox warned the trend towards last-minute booking increased the risk of company failures. “It’s very difficult to match supply and demand if everyone books late,” he said.
The committee includes representatives of groups outside the ATOL protection system, such as Travel Trust Association chief executive Todd Carpenter.