The Co-operative Travel has warned it will have to review its ATOL position after suffering a half a million pound loss due to the collapse of Scottish operator and airline Globespan last night.
Mike Greenacre, managing director of the UK’s third largest travel retailer, said he was “staggered and appalled” by the lack of action by the government over financial protection.
The Co-op suffered a £1.4 million loss last year when XL Leisure Group collapsed, in one of the biggest failures ever seen in the travel industry, because as an ATOL holder it was liable to replace customers’ lost holidays.
Greenacre conceded the situation was complicated by the pending appeal of the Travel Republic case in which the CAA failed to successfully argue the online travel agency should have had an ATOL. But he said the losses being incurred by the Co-op due to failures was undermining its determination to remain “lilly white” on the issue of financial protection and have an ATOL.
“We are just staggered and appalled at the lack of focus that there is by any government department to really draw a line under this whole debacle going on, particularly since the demise of XL last year,” Greenacre said.
“We cannot for the life of us understand why the government wants to continue to prevaricate over consumer financial protection. We need to remove the complete uncertainty that there is around this issue.
“If that does not happen soon even a brand of the likes of the Co-op Travel is going to have to give serious consideration about what our position is. We are trying to be lilly white about this, we are trying to use our own ATOL, but we are not going to continue taking these losses while the government prevaricates.”
Greenacre said the UK travel industry is likely to have a solution foisted upon it by Europe as part of its review of package travel rules within the next three years if no solution can be found.
And he said the situation is bolstering the case for a conclusion that there should be a simple solution that means every customer is asked to pay to be protected no matter what they buy or how they buy it.
The biggest stumbling block to this in the past has been scheduled airlines, particularly BA, which has argued its customers should not have to pay a levy to be protected because it is too strong to go out of business and it would, in effect, be subsidising weaker rivals.
But BA’s current financial plight has prompted management to warn the airline is in a precarious position, even if the government cannot afford to let it fail, due to the widening black hole in the airline’s pension fund.