Will 2009 see more travel firm failures?

And now it’s official, well according to Thomas Cook it is. With over 30 tour operators and more that 20 airlines failing in 2008, the head of Thomas Cooke has predicted that up to 15 more British travel companies will collapse in the first quarter of 2009. This is being put down to cash flow problems during the leanest months of the year. “If companies can survive the next three months they should be fine, but this period is crucial,” he said.

The financial crisis is likely to claim more victims so it is important to get some protection. Some insurers offer Passenger Protection Insurance, often termed Dynamic Packaging Protection, sold separately or part of a travel insurance policy but always check the small print if this is offered because these are quite often restrictive in their cover. You can reduce the risk further by organising your travel through tour operators and agents covered by ATOL or who hold bonding through an approved body, such as ABTA or AITO. What is ATOL? This stands for Air Travel Organiser’s licensing and is a protection scheme for flights and air holidays, managed by the Civil Aviation Authority (CAA) and protects the customer from losing money or being stranded abroad when a tour operator goes bust.

All licensed firms have to lodge bonds with the CAA so that, if they go out of business, the CAA can give refunds to people who can’t travel and arrange for people abroad to finish their holidays and fly home. And ABTA? Members of the Association of British Travel Agents are required to provide financial protection for their customers which means that you can book your holiday knowing that if an ABTA member fails financially while you are on holiday, you can continue your holiday as planned.

If your holiday has not started, then you will receive a full refund or be given help to make alternative arrangements for the trip to proceed. Likewise AITO, or Association of Independent Tour Operators to give it its full title, require their members to protect their customer’s money in the event of an AITO member going into liquidation.

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