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Kelkoo urges tour operator awareness

Kelkoo urges tour operator awareness

As the travel industry embarks on the busiest holiday booking period of the year, consumers would be wise to check out the financial security of the travel provider before they part with their hard earned cash.

Over the past 12 months alone, 24 holiday companies have collapsed, leading to 74,000 holidaymakers reclaiming £26 million.

This equates to an average of £2.2 million being claimed each month with the average traveller expected to wait up to four months for their refund.

However, this is a slight improvement on 2010, when 29 companies failed, impacting more than double the amount of travellers (189,000) making £47 million worth of compensation claims.

Research from shopping comparison website, Kelkoo Travel, produced by the Centre for Economics and Business Research, reveals that overall, the average claim per passenger has risen by 41 per cent from £250 in 2010 to £353 this year.

While for those impacted specifically by the failure of a long haul specialist, the figure increases by three per cent from £1,142 in 2010 to £1,173 in 2010.

The main factor behind the increase in the average claim per passenger is that more long-haul specialists have failed in the past 12 months.

Despite the significant amount of money that can be reclaimed, nearly one in ten (eight per cent) travellers has missed out completely on compensation payments to which they are entitled.

Over the past 12 months, more than 6,000 customers have failed to submit legitimate claims for more than £2 million worth of refunds.

When a holiday company fails, consumers who have booked package holidays are covered by ATOL (Air Travel Organisers’ Licensing), as all providers selling these holidays must by law subscribe to this scheme.

To pay for this protection, all ATOL holders add £2.50 to each customer booking, which is then paid to the Air Travel Trust (ATT), operated by the Civil Aviation Authority (CAA). 

In the event of a travel company failing, the ATT fund is used to repatriate stranded holidaymakers and pay claims for losses incurred by customers. 

In the last three financial years, the ATT has received more than £103 million in ATOL protection contributions and spent approximately £93 million on 524,000 customers.

Additional Kelkoo research highlights more than seven in ten (71 per cent) would find it a financial strain to re-book their holiday if they had to wait for up to four months for their compensation to arrive.

The key booking period in 2011 saw seven companies collapse affecting more than 4,600 travellers.

This could be a cause for concern for the travel industry if the first quarter of 2012 follows a similar pattern.

Kelkoo Travel’s research highlights that the largest failures over the past 12 months have occurred in the peak season when customer bookings and deposits are at their highest.

The biggest collapse in the past year was Holidays 4 UK Ltd on the 3rd August 2011, which led to 62,000 customers losing their holiday and making a claim and 12,000 travellers being repatriated.

While the impact of recent collapses have led to marginal increases in prices, the effect on holiday charges will be determined by the scale of future collapses in the industry, which could lead to rises in holiday prices.

Chris Nixon, managing director of Kelkoo Travel, commented: “Economic conditions in the holiday market have been incredibly challenging in 2011 with travel companies having to contend with factors such as rising fuel costs and the impact of air passenger duty.

“But it is reassuring that significantly less holidaymakers were affected by travel company collapses this year compared to 2010.

Since 2007, when APD was introduced, package holiday prices have increased by 20 per cent.

“On top of this, there has also been the backdrop of weak consumer spending and income growth that have dampened demand.

“All of these factors have had a direct negative impact on travel companies.

“Unfortunately, 2012 will see other holiday companies go to the wall, so travellers booking their summer holidays over the next few weeks should check that they book with an ATOL-protected company, so they can be sure that if their travel company does collapse, then they will be compensated.”