Malcolm Preston, head of Travel, PricewaterhouseCoopers LLP, comments on the impact of the failure of XL Leisure Group on the budget travel sector.

“Despite this morning’s announcement, the credit crunch has not signalled the end of the budget industry, nor has it stopped it in its tracks, but it is a wake up call for those that think fuel and currency costs cannot be passed on.

“On average, prices will go up, and with over two million seats being taken out of the market, there could even be a shortage of capacity if no one puts the planes back in the sky. This in itself could put even more upward pressure on prices.

“The knock on will undoubtedly be significant. The victims of this administration will not only be consumers who booked without financial protection, but also those operators who relied on the likes of XL for flights. Those on course to benefit will include the operators who are left. Charter airlines and low-cost airlines should be able to pick up the hole in supply left by XL.

“While the immediate priority here is to refund customers and repatriate those stranded overseas, there will be many customers who have, knowingly or not, parted company with their cash with no consumer protection in place. It will be an expensive lesson for them and I suspect many customers will now start to look more closely at whether they are protected, before they book.”