Has the rain dance saved the lates market?

Who needs a downpour in a drought? Well you won’t find many tour operators or bed banks complaining as the recent weather has caused sales to sore by 40% year on year.

For once the weather gods have smiled on the industry with the perfect combination of sunshine while families where at work or school, followed by a wet Easter and a constant barrage of grey skies and pouring rain ever since. Even I’m sitting here planning a trip to get away from it!

More importantly however, is the impact it may have on the peak summer school holiday period. Although the Government may be pushing the “Staycation”, customers want relaxing sunshine as part of their holiday and the recent weather has rammed home how unreliable the UK weather is, which is likely to have strengthened demand for overseas holidays.

Another more obscure factor going in the industries favour is the lack of an England football manager! We are only 6 weeks away from England’s opening game against France on June 11th and have you heard a mention of it? The complete lack of hype this time around is a marked contrast to previous football tournaments and particularly compared to Euro 2008 in Germany when so many English fans jumped in cars, plans and trains to head out to watch first hand. Many fewer will be travelling to the less inviting Ukraine, so logically the impact on the nations holiday budgets will be less and even in the unlikely event England get to the final it will all be over by the 1st July.

The most difficult part of managing lates yield is getting prices up from the £149 price points that dominate early season to £399 plus required post 22nd July for school holidays. The points above should help early season prices and don’t forget that the Olympics do not start till after the schools have already broken up. Hence although I do expect them to dampen demand neither the Euro’s nor the Olympics will directly impact the crucial month of July when prices need to be wound up quickly.

However, please don’t think I am saying this year’s lates period is going to be easy. It looks like we are in the midst of a double dip recession and the year on year increase in fuel prices, whilst currency hedging has negated an benefit of the strengthening pound, means operators need to get £15 higher late holiday prices even to make the same losses as last year.

They say that every cloud has a “Silver lining” and as we look up at the depressing cloud cover over the next few weeks, think of the job security they may be delivering to some elements of our industry.

ATOL Flight Plus | Flight Plus from ATOL

Congratulations to the CAA…you pulled it off and have brought the Dynamically Packaging sector to heal and into the ATOL fold as of May 2012.

There have been a few keystrokes of luck along the way. For example if DNATA had not acquired Travel Republic, it is likely that they would have again taken the CAA on head to head and gone down the perfectly legal  “Agent of the Customer” route avoiding the requirement to offer Flight Plus ATOL cover. This in turn would have left the rest of the sector with the difficult choice of giving a competitor a significant pricing advantage or following suit scuppering Flight Plus in the process.

Secondly, Flight Plus is being launched at a time when the weakest airline players like Excel, Globespan, etc. have already bitten the dust leaving the bulk of flight supply in the hands of stable airlines like Ryanair and Easyjet. Hence, the market for SAFI and Supplier Failure Cover have opened up enough to allow Agents to re-insure their increased risk from supplier failures.

Flight Plus ATOL will definitely benefit the CAA and the Government, but I have reservations whether the changes will actually benefit the customer, as I can see even more delays in customers getting their holiday money back in the case of a major airline failure.

Historically when a tour operator collapsed agents made customers pay again for their holiday and then reclaim their money back from the CAA, which often takes up to 9 months. Under Flight Plus, legally the agent cannot charge the customer again and must replace the flight at their own expense and reclaim the cost from their insurers if they have SAFI or Supplier Failure Cover.

However, there is no legal requirement for agents to have such insurance cover and no way for customers to know which agents do or do not have insurance. So what happens when an agent does not have insurance and cannot afford to replace the flight? The customer can no longer directly claim from the CAA as it’s the travel agent’s liability and therefore they would have to take legal action against the agents and only if this forces them into bankruptcy would the CAA pay out.

The simple question is, how long would this take and how is this clearer for the customer?

Given that all major Dynamically Packaging companies have been providing SAFI or Supplier failure cover as financial protection for the holidays they sell, its hard to see how the move to Flight Plus ATOL has improved the protection offered to customers, but it is clear that a the ATOL logo is not the uncomplicated insurance customers may think it is.

Flight Plus TOMS Open letter to ABTA and CAA

To Luke Pollard/ Andy Cohen

Cc Mark Tanzer

Flight Plus TOMS VAT

Luke, as discussed on the phone I am concerned about HMRC seeing Flight Plus as an opportunity to broaden the net of TOM’s VAT to include travel agents that are dynamically packaging. I therefore think its imperative that ABTA as our industry body, seeks written guidance from HMRC as to “exactly” what contractual arrangements must be put in place once Flight Plus ATOL’s are introduced in April 2012.
Continue reading