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CAR Fails to Explain Lowcostholidays Low Bonding Level

CAR Fails to Explain Lowcostholidays Low Bonding Level

In its Annual Report for 2016 the Commission for Aviation Regulation (CAR) asserts that “in the first half of next year” it will assess the adequacy of the consumer protection scheme and the Travellers’ Protection Fund – but fails to record that the Irish division of Lowcostholidays was bonded by CAR for just €79,243 or say why this was the case. The collapse of Lowcostholidays resulted in €3.26 million (or 65%) having to be drawn down from the €5 million Travellers’ Protection Fund.

The above figures do not include the losses incurred as a result of the collapse of Lowcostholidays’ sister company, the Lowcostbeds bed bank (which was not licensed by the Commission for Aviation Regulation). These could have been more than €0.5 million, most of which the general public did not have to suffer due to the generosity of their travel agents. One large travel agency was allegedly €85,000 out of pocket while many smaller agencies incurred losses of €20,000 or more. Such figures do not include the cost of staff time spent sorting out retention of clients’ hotel bookings or organising alternative accommodation.

In 2016 a total of €60 million was held by the CAR in bonds (€19m from tour operators, €41m from travel agents) on projected licensable turnover of €1,221 million (€188m for tour operators, €1,033m for travel agents). All these figures were similar to those in 2015.

With regard to monitoring compliance with licencing conditions, the Commission commenced or continued investigations into eight complaints received concerning possible unlicensed trading. It also carried out a number of visits to companies suspected of unlicensed trading – but does not say how many.

The following are extracts from the annual report:

Travel Trade Licensing

In 2016, 290 travel firms were licensed. Although there were a number of firms that withdrew from the sector, 20 licences were issued to new applicants resulting in a net increase in the total number of licences issued.

 

 

CAR Annual Report Licensable Turnovers

Company Collapses

In July 2016, Lowcostholidays Spain SL went into administration. This company sold holidays in many countries and over 100,000 customers internationally were affected by this collapse. In Ireland, the Commission provided compensation of €3.34 million to 3,871 eligible claimants. The scheme closed at the end of the year. The level of compensation exceeded the level of the bond provided by Lowcostholidays Spain SL. This meant the Commission had to draw down funds from the Travellers’ Protection Fund to provide the necessary level of compensation.

This has had a significant impact on the amount remaining in the Travellers’ Protection Fund and in 2017 the Commission will assess the adequacy of the present consumer protection scheme to see if it continues to meet the objective of ensuring consumers are protected in the event of future collapses.

Monitoring Compliance

In 2016 the Commission commenced or continued investigations into eight complaints received concerning possible unlicensed trading. We also carried out a number of visits to companies suspected of unlicensed trading.

In addition, we visited 17 tour operators and travel agents to ensure compliance with licence conditions, with a small number receiving follow up visits. These visits also provide us with a better understanding of the organisations licensed and provide an informal opportunity for information exchange.

Looking Forward

In the first half of next year, we will assess the adequacy of the current consumer protection scheme, which involves travel agents and tour operators providing bonds, and the Travellers’ Protection Fund. We will determine if this scheme continues to meet the objective of ensuring consumers are protected in the event of future collapses. We will also consider the extent to which this scheme meets the requirements of a new EU Package Travel Directive, which needs to be applied from July 2018.

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NEIL STEEDMAN has been a trade journalist, copywriter, editor and proofreader for 50 years, and News & Features Editor for ‘Irish Travel Trade News’ for the past 40 years.

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