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Second British travel company goes under as taxpayers faces £20m compensation bill for XL collapse  Sep 14, 2008

Hundreds more British tourists have been left stranded abroad tonight following the collapse of a second travel company.

K&S Travel, which specialises in tours to Turkey, has suspended all operations and cancelled all holidays - affecting around 550 people.

The news comes after it emerged that taxpayers will have to foot the £20m cost of bailing out the holiday industry's compensation scheme after the collapse of the XL travel group.

The Government will be forced to bail out the Civil Aviation Authority's (CAA) compensation scheme, which is already £21m in deficit.

The CAA said the collapse of K&S Travel, which also trades under the name Travel Turkey, will affect about 550 people who are either on holiday or about to depart.

About 150 tourists are thought to be stranded, mainly those holidaying in the Turkish resort of Bodrum.

The collapse of XL, the UK's third biggest travel operator, has been described as one of the largest failures in the industry.

It has left up to 1,700 staff facing job losses, planes impounded in 50 destinations, and 85,000 holidaymakers left stranded abroad.

The CAA has vowed to stick to its compensation package, promising to repatriate or refund all but the 10,000 who booked their flights directly with XL airways.

It can call in £42m from seven of the country's largest insurers, which are liable for a bond that XL had to put up when it renewed its Air Travel Organisers Licence (Atol) in March.

But, as the estimated cost of XL's failure is £60m, the taxpayer will have to make up a £20m shortfall as the Government has guaranteed the authority's emergency fund.

The CAA has confirmed that its air travel trust fund is already in deficit.

'Although it is too soon to say what Atol's total liability will be as a result of XL's collapse, any extra funding over and above the bond will be borne by the trust, which ultimately is guaranteed by the government,' a spokesman said.

Bookmaker Paddy Power is already taking bets on which travel firm will be next to call in the administrators, and several smaller agents are expected to collapse as a result of XL's failure.

British Airways' chief executive Willie Walsh has warned that another 30 airlines will go bust by the end of the year.

The CAA has said it will charter an aircraft to fly people affected by the collapse of K&S Travel back to the UK once their holiday is over.

Another 400 travellers are due to depart on holidays booked with the travel company in the coming days.

However they are being urged seek a full refund rather than turn up at the airport seeking alternative flights as their bookings have been cancelled.

Volatile fuel prices and the global economic downturn has been blamed for the collapse of the companies, the latest in a series of travel industry failures.

Long queues and emotional scenes continued at airports around the world today as returning XL passengers tried to find out how they would get home and those due to start holidays realised their plans were in disarray.

Second British travel company goes under as taxpayers faces £20m compensation bill for XL collapse
British tourists queue at Reina Sofia Airport after their flights were cancelled / EPA

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