Consumers travel plans up in the air due to financial crisis
By Darren Cronian on Monday, October 6th, 2008

What is a travel consumer supposed to do when they want to plan and book their holiday early? There is a chance that their holiday could end in heartache if the tour operator, travel agency, or airline was to go into administration.

Consumers travel plans up in the air due to financial crisis

Package Vs Do-it-Yourself Holidays

For the past two years I have wanted to travel around the United States, so I thought I would plan and book early. This weekend I paid a visit to First Choice to pick up some brochures. I would love to do the 16-day tour around the West or East Coast, but this would set me back £1,600 including a ridiculous single person supplement with Cosmos Tourama.

Compare this with 16-day tour of the East Coast, booked independently, with a return flight to New York with Aer Lingus, budget hotels, and an Amtrak ticket to get around, costing under £1,200 saving me nearly £400.

No confidence in struggling airlines

That is a lot of money to me, but in the back of my mind, I am aware that Aer Lingus have just announced that they are making over 1,000 staff redundant. This does not make me very confident about booking a flight with them.

Yes, I could book by credit card for financial protection, or take out airline failure insurance, but if I am stranded abroad, I am going to have to find my own way back home.

Delay in claim refunds and re-booking stress

On the other hand, I could book the trip with an ATOL registered travel agency, but there is nothing stopping that agency going into administration, and then I am left with the stress of trying to claim my money back and have a wait before I can book another holiday.

The future of travel is not rosy

The future does not look too rosy for travel does it when you put it into perspective. Therefore, what is a consumer supposed to do? Last year I planned to go to Canada, and I was on the verge of booking with Zoom airlines, how lucky was I.

I have travelled all over Europe, by booking direct with the airline, and then booking my own hotel, but booking this way to the United States is too much of a risk in the current climate. I want to book the holiday in December for September 2009, so it will give me time to pay for the holiday and save up spending money.

Consumers face booking dilemma

If I book it independently, I save myself £400, and potentially book with an airline or hotel company that goes bankrupt. Alternatively, I pay the extra £400 and feel confident that the Civil Aviation Authority has to get me back home or refund my money.

I am sure it is a dilemma that many consumers now find themselves in.


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4 responses to “Consumers travel plans up in the air due to financial crisis”

Lee Harrison | 7 October, 2008 at 9:38 am

Darren, Very difficult to compare DIY and Cosmos Tourama. Cosmos Tourama are superb when it comes to Tours of the States and Canada, Everything Pre-planned and booked for you, not forgetting time to sightsee whilst others do the work of getting you from a to b with the added bonus of knowledgeable tour guides , included excursions etc etc.
We have had many of our clients go with Cosmos Tourama ( Even a couple on their honeymoon !) and it’s great when every one of them has come back in to us afterwards to thank us for a great tour.

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Mark | 8 October, 2008 at 2:26 am

Cosmos…hotels too far from town, too many people on the bus and too rushed. Also, who wants a tour guide to take them into a restaurant where they get a kickback for whatever you spend…bring on multiple night tours and ones that explore some regional destinations as well. River cruising is the way forward for Europe in many places. Unpack once, a cruise meets tour. Where rivers don’t run watch out for organized train tours as the next big thing.

Anyway, just thought I’d add that in Australia to become a licensed travel agent, online or offline, you have to join the Travel Compensation Fund [TCF]. It requires about a 10k capital injection plus $6k per additional office and a rigorous audit process. If you don’t have sufficient net capital in some areas you have to take out a bonding guarantee to the fund. This protects consumers from any agencies that go under or into administration. We have seen about 10 happen in the last 2 months in AUS and all clients are covered. Downside – no such regulatory body exists for airlines and when Ansett, Air Paradise, Aloha etc go under there is no such safety net. I remember when Balinese based Air Paradise went down, worst week of my career. However, travel insurance provider Covermore in AUS now provides cover of $10,000 per person for bankrupted or collapsed airlines. Quite a good point of difference. Perhaps you lot north of the equator could take some tips…

MT

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Nick | 8 October, 2008 at 10:54 am

Mark,

That is similar to ATOL here, to get a small ATOL (less than 500 passengers a year) you need £20000 plus £1 per passenger. For ABTA to become a new member is £60000 and £15000 net working capital, plus the bond and a percentage payment in to the shortfall fund, however this is now very small payment as it has built up so large over the years that the interest covers almost all failures. We also sell covermore here (same company, but no cover for collapsed companies).

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Darren Cronian | 10 October, 2008 at 12:38 pm

So getting away from the Travel Agency talk ;)

Do you think it is a dilemma for consumers, where choosing the right way of booking, with the right companies, puts additional stress and frustrating when booking a holiday now. I do, but would appreciate your opinions.

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