Now Dnata’s Travel Republic and Travelbag have followed Lastminute out of Abta, where does it leave the association? Ian Taylor reports
News that Dnata Travel Group brands Travel Republic and Travelbag have left Abta raises questions unanswered by Dnata’s release and Abta’s response to it.
Their departure follows that of Lastminute and holding company Bravonext to join the Association of Bonded Travel Organisers’ Trust (Abtot) this month and leaves Abta with just eight of the top-20 Atol holders in membership.
Some major Atol holders, such as Booking and Expedia, have never been Abta members. Others like Loveholidays and On the Beach quit during the pandemic over Abta’s code-of-conduct requirement to refund consumers in full for cancellations regardless of whether airlines refunded the flight portion.
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An announcement this month by the School Travel Forum (STF) that its members can now join Abtot added to a sense that Abta is haemorrhaging members.
In fact, STF members already had the option to bond with Abtot and Travel Weekly understands none of its members have so far left Abta.
Yet the departures come against a background of criticism of Abta’s hiked bonding costs and toughened financial requirements during the pandemic and an 8.5% increase in subscription rates this month.
There has also been frustration that Abta-led lobbying during the pandemic did not win more from the government, and there has been long-standing criticism from some smaller agents about Abta’s representation of them.
Half in and half out
Dnata remains half in and half out of Abta. The group’s B2B brands, including Gold Medal, remain members, and Dnata Travel Group UK and Europe chief executive Ailsa Pollard remains on Abta’s board. Presumably, if Pollard had concerns about the value of Abta membership she would have raised these at the board.
Being half in and half out of Abta need not be an issue. EasyJet is in a similar position with easyJet Holidays an Abta member and chief executive Garry Wilson on the board while the easyJet airline – an Atol holder in its own right – is outside the association.
But where does this leave Abta’s representation of the industry? The association used to represent about 80% of the outbound holiday market. It now claims to represent about 70%.
Atol business is one indication of Abta’s market share. Travel Republic is less of a loss than once it would have been, with a current Atol for just under 369,000 package bookings, down from 799,000 a decade ago. Travelbag adds 42,000. Gold Medal holds an Atol for 299,000.
The eight remaining Abta members in the Atol top-20 still account for 58%-plus of the top-20’s public Atol sales and 61% including Atol-to-Atol sales.
The remaining 1,599 Atol holders are licensed for about 4.9 million Atol bookings and a majority will be Abta members, so the ‘long tail’ of Atol holders most likely does take Abta’s overall market share to about 70%.
Plus, Abta dominates financial protection for non-flight packages as one of only two current providers approved by the government, the other being Abtot.
The association’s current membership issues stem largely from the impact of Covid-19 on the sector and the failure of Cruise and Maritime Voyages (CMV) in July 2020.
The cost of the CMV failure, triggered by the pandemic shutdown, fell almost exclusively on Abta as the company operated UK-departing cruises. CMV’s administration resulted in a £12.7 million loss to Abta’s captive (inhouse) insurer, wiping out most of its reserves.
The company provided a bond to provide financial protection in the event of failure, but this proved wholly inadequate to cover the volume of cruise bookings requiring refunds five months into the pandemic – not just the anticipated forward bookings but the huge number of cancellations through the first Covid-19 lockdown.
At the same time as incurring this loss, Abta also had to manage the consequences of its decision to protect, support and campaign for Refund Credit Notes (RCNs) for package holidays cancelled due to Covid.
The decision was surely correct. Without it, and the subsequent government and CAA recognition of RCNs which Abta helped bring about, the legal requirement on companies to refund millions of consumers in full for cancellations due to Covid would have bankrupted much of the sector.
Maintaining services
However, this left the association financially protecting vastly greater sums than members’ existing bonds would cover and with a depleted insurance fund – inevitably leading to increased bonding requirements at a point when most member businesses had limited means to meet these.
Abta chief executive Mark Tanzer also took the decision, with the backing of the board, to maintain Abta’s full range of services through the pandemic rather than make cuts which would have depleted these.
This attracted criticism in some quarters. But Tanzer justified the decision, telling Travel Weekly:
“The board were very keen through Covid not to damage the fabric of the organisation to a point where we couldn’t deliver our services when the industry came back, because people need bonding, need legal advice, need training. If we had decided to dismantle the association, we would have had great difficulty providing those services.”
The association has subsequently addressed some of the issues around its bonding requirements during the pandemic with a series of revisions in time for the September renewals.
It has also taken a step towards addressing concerns among smaller agency members by appointing an additional agent representative to the board – Henbury Travel owner Richard Slater – from September.
Abta has weathered multiple crises before. During Tanzer’s almost 18 years as chief executive the association has navigated the financial crisis of 2008-09 which saw 75 Atol holders fail within less than two years, including the third-largest travel group at the time, XL Leisure.
It has had members quit over its stance on EU package travel reform, coped with the loss of one of its two biggest subscriptions payers, Thomas Cook, in 2019, and handled the many challenges of the pandemic.
The association should undoubtedly be more open to criticism. Its status outside the sector means it can afford to be. But the industry would be mightily diminished without it.
And the bulk of the industry, beyond the ranks of the biggest companies and major platforms, will be better able to face the challenges ahead – from the opportunities of generative AI to the consequences of the accelerating climate crisis – with Abta’s assistance.
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