The head of the advisory committee to the government on air travel insolvency hit out at the failure of Lowcost Travel Group, calling it “a total mess” and warning of damage to “the whole industry”.

John Cox, chairman of the Air Travel Insolvency Protection Advisory Committee (Atipac), raised the failure in a letter to transport secretary Chris Grayling, saying: “The collapse is a stark reminder of the importance of making sure UK consumers have effective protection whoever they book with.”

Cox told Travel Weekly: “When Lowcost opted out of Atol and moved to Majorca, we asked a lot of questions about the rights of UK citizens. Basically, [we found] if anyone lost money they would have to go through the Spanish courts.”

He said the move to Majorca meant “UK travellers could unknowingly purchase a holiday from a company not in the UK [Atol] scheme” and said: “This is a total mess.”

Cox suggested: “There is a case for an investigation into the financial fitness of the directors.

“They ran the business. They’ve gone bust. They have to take responsibility.”

He added: “The health of the trade depends on consumer confidence, and if that is called into question it damages the whole industry.”

Cox also warned of “a knock on effect”, saying: “If Atol-holders sourced beds from Lowcost, it could put a financial strain on them and there could be other failures.”

The uncertainty facing consumers and trade partners affected by the failure contrasts with the good health of the Atol financial protection scheme, which Lowcost turned its back on.

The Atipac annual report, published on Monday, noted there were just 10 Atol failures in the 12 months to March, the largest having just 339 customers abroad and 2,693 forward bookings, and the Air Travel Trust fund had a surplus of £139 million.