Commentary: Long, hard summer for travel trade

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The Independent Online
It must still be summer, even though the weather might not suggest so. We know this because there is a much more reliable indicator available - travel companies are going down like ninepins at a Butlin's holiday camp.

In the past week alone, three tour operators have gone bust and the travel trade is buzzing with rumours of another impending casualty.

This rash of failures, and the tide of stranded holidaymakers left in its wake, has inevitably led to renewed calls for better policing of the industry and better protection for its customers.

The present system is a mess. Anyone paying by credit card for a holiday costing more than pounds 100 can get their money back if the tour operator goes bust. Those who book with a tour operator or travel agent bonded through the Association of British Travel Agents (Abta) are also generally covered whether their holiday has started or not. Alternatively, there is the Atol bonding scheme, which protects holidaymakers using charter flights. Ferry and coach operators have similar bonding schemes.

However, it is not compulsory for any tour operator to be bonded and, even in cases where a company is bonded, the bond may not cover all the tours on offer. From next January the situation should be simplified when the EC's package travel directive comes into force. This will require any travel company offering overseas tours to be bonded. The difficulty will come in policing the legislation - particularly in Britain where the travel industry is as sophisticated and diverse as it is large. With only four months to go there are few clues as to how the new system will work.

There are those who balk at the idea of a bonding system on the grounds that it obliges well-run travel companies to pay for the mistakes of others and instead advocate that tour operators arrange their own insurance. But this falls prey to the same reservations since other tour operators will continue to pay through their premiums for those that go bust.

In the longer term the best solution is that put forward by the Consumers' Association. This is for the Government to establish a central licensing body that will require travel companies to prove they are soundly financed and that customers' money is protected before they may trade. In this respect the Civil Aviation Authority has made a start by promising to take a more stringent line when air tour organisers' licences come up for renewal later this month.

In the meantime, it remains a matter of caveat emptor. Wobbly tour operators should not be too hard to spot. They will be the ones offering bargain-basement breaks at unbelievable prices because their demand forecasts have gone badly awry and they need to fill capacity. That should be enough to put even the most ardent sun-seekers on their guard.

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