Travel Companies Failing Due to Covid-19
Antony Batty and Hugh Jesseman appointed as Joint Administrators of I.O.W Tours Limited. Antony Batty appointed as Liquidator of Cities Direct Limited
In April 2020 we reported on the pressures being faced by travel companies as a result of Covid-19. The outlook for the industry was bad then and it has not got any better, and, sadly, insolvencies are now beginning to happen at an increased rate. Two of our insolvency practitioners in our London office have just been appointed on two such insolvencies – one as liquidator, the other as joint administrators. Insolvency and the travel industry is a very specialised part of insolvency and requires Insolvency Practitioners with knowledge of, and expertise in, the sector. It is an area of considerable expertise and experience at Antony Batty & Company.
In this article we give brief details of both cases and also remind potential customers to always book using a credit card, especially in these turbulent times, as this affords greater protection if the company you booked with ceases trading.
Liquidation of Cities Direct Limited
As a result of COVID-19, most of its 2020 bookings were cancelled and experienced a dramatic fall off in new (forward) bookings due to the continuing uncertainty regarding travelling abroad, as a result the Company simply could not afford to continue trading.
The Company was an ABTA member and held an ATOL licence from the CAA. All clients should receive a full refund either from the CAA or the Company’s insurer, IPP.
Administration of I.O.W Tours Limited
In early October Antony Batty & Hugh Jesseman were appointed as Joint Administrators of I.O.W Tours Limited, a travel company based on the Isle of White which organised coach holidays throughout the UK and Europe, mainly for groups and associations. The Company grew from humble beginnings over 30 years ago to serving over 10,000 passengers per year. Once again bookings cancelled due to Covid and ongoing restrictions regarding groups has devasted a previously successful business.
The Company’s Packaged Holidays were protected by the Bonded Coach Holiday Group, a Government Approved protection scheme, and it is expected that clients will receive a full refund.
The Travel Industry is Unlikely to See Any Improvement Until Well into 2021
Antony Batty commented:
“It is extremely sad to see these well respected, long standing and successful travel companies going out of business through no fault of the owners or dedicated staff. I do not expect the situation to improve until late 2021 at the earliest, and I fear that there will be more such failures as the Furlough Scheme and CBILs are phased out.”
“By their very nature, travel industry administrations leave thousands of customers on holiday stranded. Some need to get back quickly for health reasons, others for work and some have had their dream holiday ruined. It can be truly distressing. Whatever happens, work to resolve these issues has to happen very quickly, which is where our industry experience is vital. The key is always to act rapidly and decisively, especially in situations where customers are stranded abroad and need repatriating.”
If You Are Planning to Book Holidays, Pay By Credit Card if You Can
When a travel company ceases trading, a key issue is that of money back and compensation. The important points are:
- ATOL protects customers when they book a packaged holiday with a UK travel company, which includes a fight. It ensures customers do not lose money or become stranded abroad if their travel company collapses. However, this only applies to package holidays and not when the flights and holiday accommodation are booked separately. So what happens if you are not covered by ATOL?
- Firstly, avoid the problem by paying with a credit card. Despite possible credit card surcharges you have the legal protection of section 75 of the Consumer Credit Act, 1979, whereby if you don’t receive the service you have paid for, the card company have to refund your payment, subject to a £100 minimum cost.
- Another option, but only for amounts under £100, is Chargeback. This is not a legal protection but is a core element of the protection offered by Visa, Mastercard and American Express, whether the payment is via a Credit OR Debit card. Here you ask the card provider to do a Chargeback, who asks the travel company’s bank for your money back as the service you purchased has not been received.
Our Insolvency Practitioners are Experienced in Travel Company Insolvencies
Antony Batty and Company has been dealing with travel company insolvencies for over 20 years. Past appointments include: Selsdon Travel Limited, Pinnacle Travel Limited, Hotel Connect, Global Enduro Limited and Sun4U Limited.
The key is always to act rapidly and decisively, especially in situations where customers are stranded abroad and need repatriating. Contact us for a free initial discussion to determine the best course of action if your company is a financially distressed travel company.