Holidays: Travel firms face collapse with predicted slump in bookings


The body that helps to bail out holidaymakers when travel companies go bust has warned that many tour operators could be heading for collapse this year.

The Air Travel Trust echoed recent updates from some of Britain’s biggest travel firms that holiday bookings for this summer had held up well.

However, it reported an increase in the number of failures of companies protected by the industry bonding scheme Atol between April and July, the first four months of its current financial year.

“Whilst the current level of bookings for summer 2008 is in line with forecasts, the signs for 2009 are less clear cut,” said Roger Mountford, chairman of Air Travel Trust. “An increase in the number of insolvencies is an indicator of tougher trading conditions and may be an indication of a further deterioration later this year.”

The Air Travel Trust supplies funding to help customers who have made bookings with failed travel companies to complete their holidays or claim refunds.

In its annual report, the trust said that 25 Atol-protected companies failed in the year to March 31 2008, of which 12 required trust funds totalling £375,000.

The trust’s overall deficit increased by £1m during the year 2007/08 to just over £21m, partly as a result of these claims. The fund – which is administered by the consumer protection group of the Civil Aviation Authority – has been in deficit since 1996, after a series of costly bailouts in the early 1990s.

This month, travel groups TUI and Thomas Cook reported strong summer bookings despite the rising cost of living and the impact of the credit crunch. Thomas Cook said that bookings for winter and next summer were already ahead of last year.