75,000 travellers hurt by failed travel companies

It has been estimated that last year nearly 75,000 people from the UK who were travelling had their travel plans interrupted because of companies going out of business. It is estimated that this left them with a total figure of over £25 million in additional expenses such as repatriation costs. In the last year nearly 25 companies went out of business and most of these occurred in the summer months when they had most people abroad.

This number of collapses is a significant improvement on the figures for 2010 but is still more than the industry would like. In 2010 nearly 10 times as many companies went broke and around £50 million in claims was paid out by insurance companies. In 2010 the average claim was around £250 but in 2011 this figure had risen by over £100. Claims for passengers who had travelled to long haul destinations were significantly higher with both figures for 2010 and 2011 coming in at over £1000.

This information has been provided by the Centre for Economics and Business Research and it still shows that despite the number of claims, many passengers are failing to claim the compensation they were entitled to. The Centre has estimated that around 10% of people are failing to claim compensation, which is worth around £2 million.

Holidays 4 UK was one of the highest profile companies to collapse this year and nearly 15,000 customers were stuck in Turkey after the company went out of business. A further 50,000 customers who had booked holidays with Holidays 4 UK had their holidays cancelled.

When a travel company goes out of business there is an insurance policy that customers can turn to to get their money back or get compensation for additional flights that they have to pay for to get home. This is called the ATOL scheme and it is something that all travel operators must be signed up to by legal obligation. Customers pay £2.50 when they book and this covers them for the scheme.

The managing director of Kelkoo Travel is Chris Nixon who has commented, “2001 was a very challenging year for the holiday market due to the weakened economy. In addition to this the increase in cost of fuel has meant that running flights is more expensive. It is pleasing to see however that far fewer companies are going out of business than we saw in 2010. Unfortunately though, consumers are still being cautious about their spending and this is having a negative impact on holiday companies.”