‘Lowcost’ but high risk
20 July 2016
Last week’s announcement of Lowcostholidays’ administration has brought a stark reminder to consumers and the wider industry that travel service providers based outside of the UK do not feature the financial protection offered to UK based consumers under the CAA’s ATOL scheme. Consumers who booked via the Lowcostholidays Group are now faced with the dilemma of holidays being curtailed in resorts, having to pay for accommodation and/or flights home again and cancelled summer holidays at the last minute. From an industry perspective, any OTA’s or tour operators using Lowcostholidays’ group inventory are having to deal with the fact that they may have to find alternatives for customers (in accordance with Flight Plus scheme rules), the inevitable credit card chargebacks that arise in these situations and the administrative nightmare of dealing with it all just as the summer holiday season begins. In some cases supplier failure insurance may be an option but this may also depend on whether consumers purchased adequate cover and indeed whether insurers will cover the failure of Lowcostholidays at all; in the past businesses that are deemed to have been at risk of failure have been excluded from such policies.