Trailfinders has confirmed it will refund all customers affected by Covid-19 and urged the industry to follow its financial model, which involves keeping pipeline monies in a trust.
Founder Mike Gooley, who set up the company in 1970, criticised the bonding model used by Abta as well as the Civil Aviation Authority’s Atol scheme and said the pandemic had “finally exposed the shortcomings of protecting the traveller”.
He said Trailfinders’ escrow accounting model had allowed it to refund customers hit by 36 airline failures over the years – and said it was currently “addressing the shortfalls surrounding Virgin Australia, South African Airways and Air Mauritius”.
More: Trust funds and higher prices may be the future for the trade, say agents
Will trust funds emerge as dominant force?
The Interview: Mike Gooley, Trailfinders
Gooley said the agency is also preparing in case Virgin Atlantic fails, which he said would result in a £2 million hit to Trailfinders’ trust account and “may further burden the taxpayer”.
He said: “When I put this promise in place from our start up in 1970 I could never possibly have envisaged the global shutdown of travel we are presently experiencing. However the sheer scale of the crash cannot absolve us from discharging our warranty.
“The keystone that has enabled Trailfinders to extend this unmatched care of our clients is that we adopted escrow accounting from the outset. We have never regarded money paid to us for future travel as ours to spend on our general running expenses.
“Alas, Trailfinders is almost alone in this as the industry relies on using these pipeline monies as a matter of course rather than capitalising sufficiently to be able to ride any downturn in their particular market.
“I have campaigned for years to successive governments to make escrow accounting mandatory. It’s the simple silver bullet to reduce the constant stream of failures and the magnitude of the misery when they do. Even bookies are obliged to set aside all wagers until the result is known.
“The Atol scheme was flawed from its inception and asks the taxpayer and the better-managed to pay for the stream of failures. Abta is now a spent force and its bonding model was ever a crude and inadequate safeguard to protect the public. Their policies are now driven by self-interest with a dwindling membership. There are signs that this crisis has finally exposed the shortcomings of protecting the traveller.”
Abta chose not to comment.
