Leading Article: Holiday horrors

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The Independent Online
FOLLOWING the collapse of Land Travel, there are persistent rumours that other holiday firms may follow it into liquidation. The Department of Trade and Industry must discover first why the package-holiday industry is so vulnerable, and then why it is that customers so often suffer financial loss when a travel firm goes bust.

The former point concerns the nature of the market and the obsessive British desire for a bargain holiday. Three big companies, Thomson Holidays, Owners Abroad and Airtours, dominate the package market. There is no suggestion that they act in a collusive manner. Instead, they buy in bulk and then compete fiercely on price. When demand is lower than anticipated (as it is this year) they dump holidays, often at below cost price, at the last moment. This makes it almost impossible for smaller concerns to compete, especially as the major players have recently invaded the niche markets in which smaller concerns used to specialise.

The latter point concerns insurance. Land Travel is the country's largest coach-tour company. Yet of the 2,500 people who were on its holidays in Europe last week - and of the 30,000 due to travel next month - the great majority will not be compensated for their losses. This should constitute a warning to would-be holiday-makers. However attractive the terms, purchasers of package holidays would be well advised to discover whether or not the company that catches their attention is adequately bonded or otherwise insured.

Every cigarette packet carries government health warnings. Plenty of people continue to smoke although they are fully aware of the dangers. They are supposedly in a position to make informed choices. Advertisements for unit trusts point out that investors can lose money as well as make it.

Those who are seduced by enticing holiday brochures from their local travel agents are not necessarily so lucky. There is no obligation on travel companies to indicate in bold letters on the front and back pages of their glossy booklets whether they are adequately insured. Instead, the Office of Fair Trading publishes leaflets that outline the advantages of booking through a company which has some form of insurance. Few travel agents carry these leaflets. It is claimed they take up space that could otherwise be used to advertise package deals.

If customers want a copy of the warning leaflets, they must write to the OFT. In practice, only the most sophisticated bother to apply. Those most at risk are least likely to write to an official organisation of which they have never heard, seeking leaflets about which they know nothing.

The Government is under pressure from Brussels to implement an EC directive that would ensure all holiday travellers are compensated if the company with which they are dealing collapses. Ministers are unhappy because they feel it could represent a restraint on choice. This argument would be more convincing if the OFT were to look at the behaviour of the trade's market leaders and if those who are able to shave prices by skimping on insurance were compelled to advertise this fact to potential customers. As it is, holiday-makers will continue to get the worst of an inadequately regulated and ill-informed market.