Government needs to help keep travel companies afloat
By Darren Cronian on Friday, December 5th, 2008

You cannot switch on the television without hearing of companies going into administration; even big corporations like General Motors are struggling, so it’s not a complete surprise that a number of smaller tour operators and airlines have gone into administration in recent weeks.

Government needs to help keep travel companies afloat

Larger companies become stronger

It’s in evitable, but sad that we are seeing smaller companies struggle and fold during the current financial crisis because it’ll make the larger companies become stronger, and in return possibly increase the price of a package holiday.

From my own experiences I have found the quality of service much better with smaller independent travel agencies.

Do not forget small businesses

The British government needs to help keep smaller travel companies keep afloat, like it has done with struggling building societies and banks. Lets be honest this country needs small businesses just as much as it needs large corporations. I would not like to see a high-street without independent travel agencies and specialist travel shops.

Lack of consumer choice

I have mentioned in previous posts, what worries me when we see tour operators and airlines go into administration is we start to see less choice. I am looking for flights for the United States, and in the space of six months I have seen the cheaper options disappear as airlines Zoom and XL have gone into administration

I would like to hear your thoughts on this issue


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8 responses to “Government needs to help keep travel companies afloat”

johan | 5 December, 2008 at 2:34 pm

Hi Darren,

I agree with you that it would be a pitty to see all the small independent operators disappear. On the other hand I think this will not happen as at present consumers want choice, choice and more choice. I think it is up to the tourism-industry (so also the small guys) to make sure that they can be found (online). That will be the next challenge, crisis or no crisis.

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Kevin May | 5 December, 2008 at 8:39 pm

This plea is just wrong.

I think you should take a step back and analyse what it is really happening in the economic markets and how the government is reacting to it.

To suggest that the government bails out small travel companies to keep them afloat is just bizarre.

How would the government justify it?

It is struggling to convince people that it should part-nationalise the banking system, which was on the verge of collapse, let alone part-nationalise (which is what bailing out essentially is) small travel firms.

Travel is fundamentally an aspirational activity which people DO NOT NEED.

Long before your plea would ever be considered, most people would probably argue that organisations in the healthcare, education and a public transport sectors should be helped out with government money – not travel firms.

Secondly, how would the government do it? Loans? Public Finance Initiatives? Who would decide which organisations get the money – ministers or industry bodies?

This financial crisis is going to get worse before it gets better, but propping up small travel firms is not going to add liquidity into the market.

Sorry, pal.

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Matt | 6 December, 2008 at 12:42 am

Governement intervention seems to be required in most industries at the moment and the holiday industry should not be given any special preference. We (i.e. the tax paying public) cannot afford to pay to keep the weaker companies to stay afloat. Unfortunately it is a case of market forces being out of control at the moment and let’s all hope things get better sooner rather than later.

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Andy Hayes | 6 December, 2008 at 12:45 am

Kevin, while I agree with you, I think the point Darren was trying to make (and not to put words in Darren’s mouth) is that with banks going to small businesses and asking for their loans back, pushing out new rules and regulations on overdrafts, the financial systems is making it even more difficult for smaller enterprises to survive in difficult conditions.

What we don’t need is a bailout but pressure on the banks to use their now government-backed stability to push some of that out into the system.

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Alex Bainbridge | 6 December, 2008 at 9:31 am

Darren if you had said “small transport firms” the arguments are slightly different. (The difference between transport and travel being that transport is commoditised travel….. e.g. a ferry may be transport – but a boat based harbour tour is travel)

The small guys will be fine – its the medium sized ones you have to worry about.

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Garri | 6 December, 2008 at 5:26 pm

I have to agree with Kevin on this. It’s a naive plea. The markets are already being manipulated by the government, everything is becoming skewed and we need to see natural selection happen here.

I’m not a fan of Ryanair but O’Leary summed it recently when he said that he was looking forward to crappy (his word) discount airlines going to the wall because it meant that Ryanair would benefit as they could buy up their aircraft at a huge discount and therefore profit from their competitors’ demise.

Honest and brutal but that’s the reality. Natural selection.

You talk about diminishing choice for the consumer but the spectrum of mediocrity is very broad so it’s not big loss.

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Alex Bainbridge | 6 December, 2008 at 8:58 pm

Darren

This is a rather good little interview from Mr Clarkson (via BBC) about whether to bail out every tom, dick and harry

http://news.bbc.co.uk/1/hi/business/7766057.stm

cheers
Alex

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Alex Bainbridge | 7 December, 2008 at 9:19 pm

Now the UK gov is going to bail out technology startups!

http://www.guardian.co.uk/business/2008/dec/07/nesta-plan-technology-startups

“The government plans to launch a £1bn emergency venture capital fund in a bid to throw a lifeline to technology start-up firms.

The fund has won the backing of the new science and innovation minister Lord Drayson. It will form the centrepiece of a dramatic shift in industrial policy which will see more intervention from government.”

Maybe Darren has a point………… only travel companies will be left without any Gov assistance! (for the reasons Kevin suggests)

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