July the 15th 2016 probably wouldn’t be a date you’d remember for any particular reason. So let me jog your memory. Low Cost Holidays collapsed and went into administration. The administrator, claimed that there were approximately 27,000 customers on holiday at the time and 110,000 who had booked trips but were yet to depart.
Lowcostholidays didn’t have an Air Travel Organiser’s Licence (ATOL), because in 2013 it moved its business to here in Mallorca.
Under the UK Civil Aviation Authority’s ATOL protection scheme, if you book a flight with accommodation and/or car hire, or in some cases a flight on its own, with a UK travel firm, if the firm that organises your travel goes bust you can continue your holiday if abroad or get a refund if still in the UK. However, this protection didn’t apply in this case.
Lowcostholidays had a “limited warranty”, with just €1.2 million (around £1 million at current exchange rates) set aside to compensate customers who booked both flights and accommodation. Divided between all the 137,000 affected customers, that amounted to a paltry £7 per booking. How did they get away with it?
What about October 2nd 2017? The day Monarch Airlines collapsed. The failure of Monarch, the largest British airline to go bust, affected nearly 900,000 passengers in total. It marooned more than 100,000 tourists abroad, prompting what was billed at the time as the country’s biggest peacetime repatriation. Monarch’s problem was it was it was neither one thing nor the other. It was not really a package holiday airline, nor was it really a low-cost airline.
September 23rd, 2019? Can you see a pattern here? It was the date that Thomas Cook, the Worlds oldest travel company went bust. At that time it had debts of $2.1 Billion. They employed 21,000 people who overnight were out of work. Hundreds of thousands of travelers were left stranded across the world. The UK government launched its latest largest ever peacetime repatriation to bring 150,000 passengers home. There were 600,000 passengers in total across the World that were stranded. There were a huge number of businesses directly or indirectly affected by their demise with many owed thousands of euros. Thomas Cook had stopped settling its bills in the Balearic Islands from August 20th, even earlier in some cases, telling suppliers it could not part with any cash until mid-October for “operational reasons”. The real murky thing in all this was staff jetted from Majorca to London with £5.3million hours before the travel giant’s collapse, it was alleged. The cash was allegedly raked in from 20 hotels in the Balearic Islands and flown back to Britain by private jet, Spanish newspaper Ultima Hora reported.
So why did I bring these stories up?
Well it covers a tour operator, an online travel agent, an airline and all three were major players in Mallorcan tourism. It shows that even pre-Covid how difficult the travel industry has become in the last 4 years. Think about the losses incurred by airlines, hotels, car hire companies, excursions and all related industries with these companies disappearing. That’s tough and I haven’t even talked about 2020!
Interestingly a couple of stories broke this week that link to the stories above.
Thomas Cook are now making a comeback! Yes just a year after leaving debts left, right and centre, the firm which said “don’t just book it, Thomas Cook it!” are back. From being a traditional Tour Operator they’ve reformed as an Online Travel Agent(OTA) which was exactly what Low cost holidays were. How have they been able to do that just a year after going under? The Thomas Cook brand, including the ‘sunny heart logo’, and website were bought from the liquidators by Chinese firm Fosun last year for £11 million. Fosun who just happen to be one of the major shareholders in the company formerly known as……yes you’ve guessed it Thomas Cook! They were one of the companies that decided not to pump more money into the ailing business.
Not sure how the people that were owed money are going to take this, it will be interesting to see.
OTA’s as they’re known have become very popular in the travel industry. You may have heard of “Dynamic Packaging” which is how these firms operate. So rather than buying a package holiday these firms buy the flight, hotel, transfers and sometimes car hire separately.
Where these firms have struggled particularly in these post COVID times is in refunds. The biggest problem is the flights as airlines will leave cancellations until the last minute. This has been highlighted more this week by another couple of OTA’s On The Beach and Love Holidays. Both are unhappy about ABTA’s insistence on full refunds for package holiday makers. Basically because of the constantly changing position of the Government which meant they were struggling to get the airlines to refund money. So they’ve resigned from ABTA. Both insist that this will not affect customer holidays and they are fully covered by ATOL.
The travel industry right now is not in a good place and is looking for those green shoots of recovery. I’ve met with a few Operators these past 2 weeks and I’m detecting slowly but surely they’re confident of it returning. As I’ve said I’m always glass half full, so let’s hope that the plan our Government are obviously taking so much time on is going to be a good one(I’m not holding my breathe by the way) and 2020 will be put to bed and 2021 comes back with a huge bang. #Mallorca2021
Take care everyone and enjoy your weekend!
Richie presents the Radio One Mallorca Breakfast show Monday to Friday 07.30-11.00am on 93.8fm in Mallorca and 102fm in Calvià, online at www.radioonemallorca.com on mobile through their free App for IPhone & Android, The Tunein Radio App, iTunes, the Spanish TDT TV service and all smart speakers. If you can’t hear him on the radio then you’ll find him working at Pirates Adventure the islands number one night out and every now and again he may make an understudy appearance! Follow him on Twitter @DadTaxi1 & Instagram @dad.taxi or feel free to email him at email@example.com