Mark Tanzer, chief executive, ABTA, comments on the failure of XL Leisure Group.

“We are naturally disappointed at the failure of any travel company, especially on the scale of XL. Our immediate concern is for the welfare of stranded passengers and for passengers with future bookings.

“Our members, especially Thomson, First Choice, Thomas Cook and Virgin Holidays, are working very closely with the Civil Aviation Authority to repatriate XL customers, and the mechanism for claiming refunds is up and running.”

“The failure of XL is another demonstration of the pressures faced by the travel industry at this time – especially the airline sector. High fuel costs and restricted credit have combined to force several airlines into administration.

“Ours is not the only industry to be affected by the economic climate, and I expect to see continued consolidation of travel organisers over the coming months – a process that started last year with the merger of the largest four tour operators into two.

“Although these pressures are severe, and will continue to be felt in the short term, underlying demand remains strong. The reduction in industry capacity that follows a failure such as XL may well work to the advantage of other tour operators. The travel industry has historically been proved itself resilient to external shocks such as this.”

“Because of the mix of its businesses, the failure of XL has highlighted inconsistencies in the arrangements for protecting passengers. Although the majority of XL customers bought package holidays and would therefore be covered under the ATOL scheme, thousands who booked directly on the website would have no statutory protection.

“The government has repeatedly rejected industry appeals for a universal system of protection that would cover all outbound flights”, said Tanzer. “The failure of XL demonstrates the virtue of financial protection, and the hazards of travelling without it. We shall renew our call on government to address this issue as a matter of the utmost urgency”.

“Financial protection for passengers is a statutory requirement only if the arrangements are sold as a package. The growth of the internet and the low-cost airlines has meant an increasing proportion of travellers are buying travel outside the scheme of protection.”

“Until the situation is reformed and made consistent, we recommend that travellers buy package holidays from ABTA members, as these provide full repatriation and refund protection.”