The Covid-19 pandemic has further revealed the “profound under-capitalisation” of the travel industry, according to Trailfinders.
The prolonged downturn will expose the fault lines and the Civil Aviation Authority will have no choice but to take action, the travel group believes.
Travel is one of the only sectors in mainstream commerce that is not legally required to safeguard pipeline funds.
It has been up to each company to decide to what extent they protect their clients’ money and whether they use it as “working capital”.
Trailfinders chief executive Toby Kelly said: “We need tougher intervention. Using clients’ money, without their knowledge, as working capital is rightly not allowed in other industries.
“Estate agents, bookmakers and solicitors are all required to safeguard clients’ money; travel stands apart, absent financial regulation.
“Safeguarding clients’ money won’t mean that travel organisers and airlines don’t fail, but it does mean that consumers won’t lose their holidays and the taxpayer won’t have to shell out tens of millions as they did with Monarch and again with Thomas Cook.
“It will take time to implement, but begins by being clear that client’s money is theirs. Travel isn’t different from other sectors, it has just been under-capitalised.”
He added: “The industry has suffered, but the consumers are the ones who have been hit the hardest. Not only have they been forced to adapt to life in lockdown, but they’ve also dealt with gruelling refund processes.
“We are refunding clients within 72 hours, well within the 14-day legal obligation to do so, despite having no guarantee that we will recuperate the funds from suppliers. For us, maintaining this level of trust is imperative.”
Trailfinders, which marks its 50th anniversary today (Monday), has seen its customer demographic broaden since the start of the pandemic and the company will focus on diversification into “other life stages”.
Founder and executive chairman Mike Gooley, a long-term campaign for tighter industry regulation and financial protection for travellers, said: “In February, Trailfinders was on track for yet another record year and, while this is not how I envisioned we would be spending the 50th anniversary, it’s not all bad.
“Competitors that aren’t operating appropriately will disappear or be forced to adapt to higher standards, which better protects the consumer.”
The company closed its London Kensington headquarters and travel stores overnight when the pandemic hit and switched 1,000 employees over to a virtual way of working.
Gooley said: “It was incredible, our travel consultants were there for our clients as usual, ploughing through the hugely increased volumes of emails and calls requiring refunds and rebooking.
“The company banded together to repatriate 20,000 travellers, rearrange over 100,000 holidays and refund 140,000 clients at a total cost of £180 million.”
Trailfinders reopened its travel stores as soon as it was permitted, it said, ensuring that all appropriate safeguards were in place.
“We are looking to appeal to younger travellers with our new ‘Academy of Travel’ programme, providing assurances to school-leavers through to under-30s taking gap years on this once-in-a-lifetime opportunity,” Gooley added.
“Now more than ever, parents want to know that their child has support and cover should anything go wrong.”
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