Travel industry is braced for more collapses

BRITAIN'S package holiday business is bracing itself for a damaging spate of tour operator failures after the collapse of two more companies at the weekend.

Both companies - the Carlisle- based coach operator Impact Holidays and London-based DHG (UK) Ltd - were bonded. Unlike the customers of unbonded Land Travel, which collapsed in July, all holidaymakers will receive full refunds.

The travel trade has been particularly alarmed by the failure of DHG (UK) Ltd, parent group of the well-respected operator Turkish Delight, in the top 30 of package holiday companies, which was licensed this year by the CAA (Civil Aviation Authority) to carry 56,000 travellers.

DHG had 3,000 customers abroad when it ceased trading, and had forward bookings for a further 9,000. It seems unlikely that its bond of pounds 1.2m will be sufficient to cover the cost of refunds.

The CAA said that it is 'probable' additional funds will have to be taken from the Air Travel Trust Fund, now standing at pounds 5m. The Government announced earlier this year that a levy would be charged on all package holidays to rebuild the fund, but no further details have been revealed.

Turkish Delight had been in business since 1985, and was one of the first companies to specialise solely in Turkey. It had been particularly active in conservation. Its collapse highlights the vulnerability of small, specialist operators in the current price war between major companies.

DHG had been a leading member of Aito (Association of Independent Tour Operators) whose chairman Noel Josephides said of the collapse: 'Unfortunately, now the good guys are being forced out of the business.'

There are widespread rumours in the industry that further collapses are imminent. With operators now having to settle bills for end-of-season flying with charter airlines, cash flow is being stretched to breaking point. Nor have operators been helped by lower than expected bookings for winter holidays.

Industry observers believe that the package holiday industry has yet to feel the full effects of the present recession. It has benefited from what is described as the 'sod-it' factor - that despite all their financial troubles people book a holiday no matter what. But there are fears that the bankruptcy toll among holiday companies will mount rapidly next year as the 'sod-it' factor evaporates.

With no end to the recession in sight, and the possibiity of a devaluation of the pound against other European currencies - which would make travel to the Continent more expensive - tour operators are fastening their seat belts for a very bumpy ride this month.

Too many tour companies send solo holidaymakers to 'Colditz'-style rooms and then make a profit out of the supplements charged to single people, the Consumers' Association says today. Holiday Which? quotes examples of single travellers paying pounds 11.50 extra per night to stay at a hotel in Cyprus with Airtours, or pounds 8.50 with Falcon, but just pounds 5.36 if they book directly'. It demands a better deal for solo tourists and an end to the 'discrimination' they suffer in favour of couples.