The deal agreed between the Civil Aviation Authority (CAA) and travel retailers is good news for consumers left out of pocket by the collapse of Goldtrail, who should now be refunded quickly.
But amid reports that Goldtrail director Abdulkadir Aydin left the UK for Ukraine following the collapse, questions are being raised about the CAA’s role as the industry regulator.
In particular, there is the issue of why the CAA did not require Goldtrail to provide a bond if, as many agents have told Travel Weekly, there were concerns about the company.
Goldtrail needed a bond
The authority ditched bonds for most Atol-holders when it introduced the £1, now £2.50, per person Atol Protection Contribution (APC), but it continues to insist a bond is provided when it has concerns about a firm.
Travel Weekly understands Goldtrail had been in discussions with the CAA about providing a bond that equalled 15% of its turnover – about £10 million in value.
It is understood that the CAA wanted a bond in place by September, after the peak holiday period.
But Goldtrail will have known, with the current bonding market decimated, the difficulty it would have had in finding and affording such a bond.
The CAA has the power to close down a struggling travel company, but is recognised for its attempts to nurse many companies through difficult times.
Asked whether, in this case, the CAA had put too much pressure on Goldtrail, and that this could have been the catalyst for its collapse, head of Atol licensing Andy Cohen said: “I think that’s way off. This is a high-season failure, which is extremely unusual. There was very little pressure on them. We can’t understand why it failed when it did.
“There is currently an investigation going on as to why it went down. We have put our own investigators in there to do a thorough job for us and get to the bottom of it.”
Discount culture
Much has been made of the “discount culture” in the travel sector and the role this played in the demise of Goldtrail.
But other than in the weeks leading up to its collapse, when it was said to be selling £40-£50 below the market rate, the operator did not discount – it has always been just cheap.
Discounting cannot account for Goldtrail’s failure. As Travel Weekly’s source pointed out, little has been made of the way Goldtrail’s business has changed in recent years.
Competition in Turkey
As Turkey boomed, Goldtrail would have faced increased competition from more established UK operators selling at a higher price point, offering increased quality and moving to all-inclusive.
This will have cemented Goldtrail’s position at the bargain end of the market, and it shifted from being an operator of cheap traditional packages to largely a dealer in airline seats.
At the time of its demise, flight-only was said to account for about 75% of the company’s business with charters on the likes of Onur Air, and increasingly Sky Airlines and Turquoise bought late from distressed stock. These cheap seats were then being used by agents to create their own packages.
This led Goldtrail to try to reduce its exposure to Atol. The agents it dealt with had their own licences so the operator altered its commercial agreements with these agents putting the onus on them to protect the customer in the event of failure.
This would have reduced Goldtrail’s total contribution to the Air Travel Trust Fund in the form of £2.50 APC on bookings.
However, this clearly was not enough, and the industry awaits the administrator’s report with interest.