And who next …

Hey there, time traveller!
This article was published 13/09/2008 (6485 days ago), so information in it may no longer be current.

The media today is full of tales of one of the largest collapses yet in the global travel industry. The UK-based XL went into administration today leaving over 85,000 passengers stranded, and hundreds of thousands more without the prospect of their winter vacation materialising.It is interesting timing that this comes in the wake of our federal government’s feeble attempt to introduce a national Bill of Travellers’ Rights to our aviation industry, and it once more highlights the fragility that personifies much of the travel industry.The industry is globalised; this simple fact means that the collateral damage from XL will spread to affect, to some degree, travellers the world over. British holiday makers will have no holiday; hotels in the Caribbean will now be faced with a drop in their winter occupancy rates – some dramatic and perhaps fatal, some less so. Local restaurants in communities favoured by XL clients will sell fewer meals and local tour guides will have fewer vacationers to guide.We are entering uncharted territory in which size counts; but only to a point. Small specialist companies will do well, and even thrive in the market today; huge behemoths will prosper simply due to their size. Mid-sized companies trying to work in the highly commoditised world of sun-destination package holidays will find themselves operating on increasingly thinner margins and with increasingly stretched suppliers. Their pockets had better be deep.Some may think that the fallout from a collapsed holiday company is a number of newly discounted programs as the affected suppliers scramblle to recoup anything they can from sell-offs. In the days before $100 per barrel oil this may have been the case; in today’s world, however, there are simply not the aircraft available to carry passengers to the empty hotels. Airlines are reducing their capacity to ensure profitability, they will not be likely to roll out a furloughed aircraft to ferry discount passengers to a newly empty hotel. And if one does, be careful, be very careful.Canada still has no consumer protection schemes other than those operating in three provinces, and private insurance companies are loathe to absorb the risk of a major default. We need to see a passenger-paid program that will offer protection in the place of a default. This program would involve every ticket or travel product purchased from a licensed and qualified agency incorporating a small insurance component, and compensation being paid from this pool. Travellers pay for protection and passengers are protected. A program supported by contributions solely from the travel industry is unfair to the prudent, and only encourages risk-taking; a program designed to be financed by those who are at risk is fair, and the only long-term, sustainable solution. And until then, it is, as always, buyer beware.