Saturday, 13 September 2008

Airlines and overreaction

So, another travel company has gone bust. No surprise there. They operate on tight margins and everything has been against them - rising dollar fuel prices and a collapsing pound, hotels booked in euros and paid for at the end of the season when the pound has lost 30% or so, lower than expected bookings because of the tumble into recession, no get-out clauses for block bookings of unfilled hotels, banks unwilling to extend credit, airports unwilling to extend credit for landing fees and a general tightening of private finance preventing the raising of cash from non-bank sources. MaxJet, Silverjet, Eos and Zoom couldn't take it and now a big package holiday concern, XL, has also gone to the great bucket shop in the sky.

What bemuses me is the extraordinary overreaction of newspaper, telly and radio coverage; anyone would think all the planes had crashed rather than stayed on the ground. Of course it is very unfortunate for those stranded overseas who might need to find a few hundred pounds each to get home but there is no reason why individual customers need suffer any great hardship. Everyone with half a brain takes out travel insurance giving cover against exactly such a risk, those who do not always seem to find a way to get home without having to sell granny into slavery. When they get home they often have the right to recover either the additional airfare they have had to incur or all or part of the price they originally paid.

As for those who have not flown yet the position is very simple, only those who paid the travel company directly in cash will have no remedy and I doubt there is anyone in that position. For both those on holiday who paid more to get home and those yet to travel there are various ways of minimising or eliminating the financial loss.

If they booked through an ABTA bonded travel agent they will get their money back. If they paid by credit card they can get their money back because they have a right to claim against their credit card company. If they booked using a debit card they can get their bank to recall the payment under a (little-advertised) interbank agreement. There might be some foolish enough to have paid cash to a non-ABTA travel agency but even they can usually claim the money back from the travel agent because in the vast majority of cases their contract is with the travel agent not the travel company.

In all but a very few instances the only thing lost is a week on the Costa Del Beercan. Unfortunate and disappointing though that is for them, it is hardly worth all the wailing and gnashing of teeth that goes on every time this sort of thing happens. I do wish the meeja would get a grip.

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