Travel experts have warned of a “ticking timebomb” for travel companies as Ireland’s biggest tour operator goes to the wall.
PriceWaterhouseCoopers claim the demise of Budget Travel could herald the start of a wave of insolvencies across the sector.
For the first three quarters of this year the rate of travel insolvencies was 13 percent higher than for the same period in the previous year.
Ian Oakley-Smith, director, PricewaterhouseCoopers LLP, said:
“Despite an increase in failures this year, the travel sector has experienced a relatively low rate of insolvency, compared to other Hospitality and Leisure sectors, so far.
“This is starting to change as we see big names such as Budget Travel fall foul of the recession.
“While the weak pound and domestic holidaymaker benefitted many travel companies there is also an element of lenders not wishing to add to the company casualty list and propping up loss making business.
“Ski slopes will be desolate this season, as will early summer bookings, and inevitably this may mean a ticking timebomb for some struggling travel companies currently being valiantly assisted by financial stakeholders.”
The collapse of Budget Travel will result in 172 job losses, 17 agency closures and 750 people stranded abroad.
A further 380 people were due to fly out on holidays with Budget Travel between tomorrow and Sunday from Dublin and Cork.
Flights have been cancelled and passengers have been informed by the Irish Commission for Aviation Regulation they are entitled to refunds.
Budget Travel managing director Eileen O’Sullivan was quoted by Irish media as saying: “This has been a painful and distressing time for us all and we deeply regret that this situation has arisen.
“We will do everything we can to minimise the impact of this decision especially on those who are currently travelling with us.”
Budget Travel claimed almost a third of the Irish travel market.
A statement on the website www.budgettravel.ie reads:
“Budget Travel regret to announce that the company has ceased trading with immediate effect.
We would like to thank all of our loyal customers for their business over the last 35 years.
Please refer all queries to our customer helpdesk on 01 - 6613122.”
Its demise comes at the same time as the European Commission mooted that travellers who book holidays online or with budget airlines could receive greater financial protection if companies go bankrupt.
The rate of travel company insolvencies since the last quarter of 2007 stands at 134, with the highest figures coming in the third quarter of 2008 (24) and the first quarter of this year (27).
So far there have been 39 collapses this year, compared to 62 last year.