Abta chief executive Mark Tanzer has denied that failed cruise line Cruise and Maritime Voyages (CMV) was under bonded when it went into administration in July 2020.
CMV failed leaving Abta to refund most cancelled bookings as the cruise line specialised in ex-UK cruises with no flight element to packages. Abta has not revealed the cost, but its in-house insurance fund which backs up bonding had to pay out £12.7 million.
Speaking on a Travel Weekly webcast, Tanzer explained: “The way bonding works is set by the regulations. You can bond at a lower rate if you have an insurance backup fund, and that is the model we offer. It means members get a lower bonding rate because they contribute to what is a mutual insurance fund in the event the bond isn’t sufficient.
“What happened with Cruise & Maritime Voyages was an example of the structure working. The bond wasn’t sufficient, so the insurance came into play.”
He insisted it was the pandemic which rendered the bond insufficient, saying: “What was uniquely challenging was the timing. When travel stopped completely you suddenly had not only the future payments outstanding, you had all the cancelled cruises [from the first months of the pandemic].”
Subsequently, Abta revised its bonding requirements. Tanzer said: “We started to go to companies to say, ‘We’ve looked at your customer monies at risk because of the pandemic and this is the kind of bond we need.’ Because Cruise and Maritime happened early [in the pandemic], there wasn’t sufficient time to make that adjustment. That is what caught us out.”
He insisted: “It isn’t a systemic problem with the way bonding is done. It was to do with the timing, the pandemic and everything suddenly stopping.”
“This was a result of impossible trading circumstances caused by the pandemic. It’s a fact of life that companies fail.”
Ambassador Cruise Line, established by several former directors of CMV but with a new investor and no debt, is due to start operations in April. The new cruise line will protect consumer payments through trust arrangements and not through Abta bonding as it is not an Abta member.