Those following the Freedom Direct collapse post will have felt consumer’s frustrations when a company goes into administration. Consumers are passed all over the place, there’s a severe lack of information and the whole financial protection is just a mess.

Consumer confusion
At the time of writing this they’re 309+ comments, more than the initial post I wrote on the collapse of XL Leisure Group, but the complexity of the types of ways Freedom Direct sold holidays is the cause for a lot of the confusion.
Industry need to work together
It’s time that the industry worked together and confronted the government with real hard evidence of the stress and frustrations that the voting public. I would assist with this and I am sure they’re consumers that would be willing to share their experiences.
Improved information on booking
More needs to be done to provide information to consumers on what type of holiday that the consumer has booked and how this affects them if the company or airline goes bust, this should be included in booking emails, paperwork.
Travel agents should not be using consumer’s credit or debit card to book flights with low cost airlines. This is dangerous because the consumer assumes that they receive financial protection through the booking that they have made with the travel agent.
Improved information when company collapses
There’s a severe lack of communication when a company goes into administration. Travel consumers should not have to find out about the collapse from the media, more needs to be done to provide up-to-date information, and quicker.
Industry should have a standard format for the information provided on the company’s website when it has gone into administration, including describing the type of holidays that they have sold, and where people have to go for more information.
Time to discuss improvements
While I realise this is a very complex issue, and that the government plays a massive role in this but I started writing this blog to start discussions that consumers have with the travel industry, so I would like to see the industry to discuss this issue.
Please enter your email address to receive my free newsletter
Murray H | 5 May, 2009 at 9:29 pm
I think we all may be working towards the same end – I listed some ideas on my page at http://www.advantagecruises.co.uk/ Basically, the trade should do more to a)rally round when one its number go under, for the overall benefit of the clients and b) There need sot be some sort of central co-ordination where people can turn to.
Lee Hayhurst | 5 May, 2009 at 11:38 pm
I’m not sure there are any easy answers to this one. You’ve got trade bodies unable to offer full protection any more because that means somone has the ability to bankrupt them overnight (just look at the mess Atol is in to see where protecting travel consumers under the current legislation gets you), firms fighting tooth and nail for any competitive advantage because making an extra few pence per booking isn’t bad on the awful margins in travel, and the Government both uninterested and overly swayed by the likes of BA, which opposes the obvious soution of a single levy on all flights, because it is “too big to fail”.
On this uneven playing field, new ways of distributing online have been exploited by agents, suppliers, operators taking the industry even further down the stack it high, sell it cheap road and further confuse the situation and the end retailer has been keen to “hide” this, not for any particularly malicious motive but complete transparency will a) expose his cut/commission and b) reveal to a cusomer that’s been taught to prize price over value, or service, or indeed financial protection that they might just as easily be able to do it themselves, go direct and save a few more pennies.
I’ve heard it said anyone who took out a really cheap mortgage during the boom years are as much to blame for the financial mess we’re in as the banks who were stupid enough to lend them the money. Of course the industry has a duty to look after all its consumers but sometimes deals genuinley are too good to be true, but there will always be people prepared to take the risk and there will always be firms prepared to take their hard earned cash.
I agree, give people the information on booking about what is and is not protected, mount an awareness campaign about how to ensure you’re holiday is protected and then it’s buyer beware. Those caught out will come on here and complain, some will claim ignorance, but, as ever, that’s no defence. Until this crazy situation of the law protecting only packges is changed it just leaves too many gaping holes that commercial organisations will always look to ride coach and horses through and trade bodies have no power, or even right, to stop them.
Much of the above is already happening, as well as lobbying on changing the law by the likes of Abta, Aito and the big two, but as ever this only really interests the public, and then the government when it all goes horribly wrong.
As for better information, collapses are incedibly complex things. Just getting the wording right to put on a collapsed firm’s last week website took the best part of an afternoon and it was only two senences. The media will therefore always be first with the news because, if they’re doing their job properly they’re waiting for the plug to be pulled before they publish, and of course can do so immediately in the age of the Intenet. Official bodies like Abta and the CAA simply can’t pre-empt in such a way and even if they know a firm is struggling, can’t say or confirm anything until it is officially involved, and that’s usually after the administrators have been called in and the directors have accepted defeat. Only then do the details of that company’s business start to become clear. By that time you’ve got 30 posts.
Darren Cronian | 6 May, 2009 at 11:50 am
@ Murray
I am glad that we agree that this needs sorting out to simpflify the process and also to surely make less work for the people affected within the travel industry. I cannot see anything happening though I am afraid.
@ Lee
Great comment.
“Just getting the wording right to put on a collapsed firm’s last week website took the best part of an afternoon and it was only two senences.”
I agree and can relate to your points raised in the comment but wanted to highlight the quote above. Yes, I know the issue is complex, but if it took an afternoon for two measly sentances then surely this is reason to have default templates for displaying on companies website.
Nick | 6 May, 2009 at 12:43 pm
@ Lee
I totally disagree with your comment about bankrupting protection bodies. With regards ATOL it comes down to Lack of Government commitment after all it was the 80′s when ATOL ran out of money, so the travel industry said simple add a pound to all bookings (Your talking millions of pounds each year into the fund). If that had been done when the people who managed the license (CAA) the people who used the license (Travel Company’s) and the public representative bodies asked for it the fund would have 100′s millions in it now and no one could bring it down (not even the top 4 at the same time). Basically like ABTA was before Government took away it’s mandate in 1992. But no it took 20 years of lobbying by everyone before the government moved, yet in the mean time they been happy to take APD tax off all travelers for nothing.
Nick | 6 May, 2009 at 12:52 pm
Darren Yes this is a government rant. Not this Government all.
Travel & Tourism is one of the largest employers (some the largest, only Government beats us) and tax payers in the country so in Government we are represented by:-
The Department For Sport.
Is any wonder the travel and tourism industry is in such a mess?
Darren Cronian | 6 May, 2009 at 6:59 pm
@ Nick
Glad you had your rant, that’s what this blog is all about, not just a place for consumers but travel industry people too. As for the ‘department of sport’ I agree that is stupid, other countries have their own department for tourism/travel.
Kevin May | 7 May, 2009 at 11:50 am
i agree entirely with Lee on the role of the media in providing news and information when a company collapses.
Darren, your line: “Travel consumers should not have to find out about the collapse from the media, more needs to be done to provide up-to-date information, and quicker.”
how do you propose that consumers find out, then?
Nathan Midgley | 7 May, 2009 at 2:39 pm
@Nick to be fair to Lee, all he said was “You’ve got trade bodies unable to offer full protection any more because that means somone has the ability to bankrupt them overnight”. That’s just the result of the process you described. Don’t think Lee is endorsing it.
In terms of keeping the fund healthy, what’s your take on the idea of playing catch-up now with a £3 levy? We expected loads of comments and letters when we ran that story, but everything was oddly quiet. I think few expect the consultation on extending the scheme (coming this autumn, apparently) to go anywhere – increasing the charge is after all the path of least resistance.
On government involvement: traditionally government cares more about inbound tourism than about Brits travelling abroad (unless a. something goes wrong or b. said Brits start smashing abroad to pieces).
The real question is how do all of us – trade media, mainstream media, corporates, agents, ops, bloggers, consumers – go about reaching a consensus and putting it across?
Darren Cronian | 7 May, 2009 at 3:51 pm
@ Kev
With hindsight thats not Practical, the media will obviously jump on to the story (like I would) whenever there is news about a collapse of a travel company. I wonder though would it be practical to have an opt-in service by say ABTA, where consumers can be updated via email i.e. when any company goes into administration or, updates as they go through the process.
I am sure if ABTA/CAA were more open in the process that they have to go through I am sure consumers would be a little more understanding. Just some thoughts, I think its a discussion that needs to be had.
Darren Cronian | 7 May, 2009 at 3:54 pm
“The real question is how do all of us – trade media, mainstream media, corporates, agents, ops, bloggers, consumers – go about reaching a consensus and putting it across?”
@ Nathan
Spot on. I agree that a combined consensus needs to be worked upon. It’s a massive undertaking, but there’s plenty of smart people in the industry, and plenty of consumers with bad experiences.
I’d be happy to get involved wherever I can.
Nick | 12 May, 2009 at 1:24 pm
Nathan, sorry missed your comment.
1. No protection body can collapsed like suggest because the likes of ABTA etc are well funded and the CAA is a government body so would require the government to collapse. What was happening was a lot of Fraud and the protection bodies stopped covering that.
2. As to the £3 Levey… well think most when they read your paper thought the same as me…. We told you so! Plus what good is it to complain… like Brown and Co. want to listen to us. We been shouting for years, they have there ear plugs firmly embedded now. Plus we do want to protect the customer. Much more interesting is reading Maureen’s week
Nick | 12 May, 2009 at 1:26 pm
Generally as well Lee is right about the Government listening to airlines… as to BA etc being to big to fail… wasn’t Pan Am and TWA?
12 responses to “Improvements needed when a travel company collapses”