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Over 3,600 customers affected by collapse of six travel firms last year

The Commission for Aviation Regulation said cash reserves in the Travellers’ Protection Fund would be insufficient to compensate all claimants.
Feb 16th 2021, 1:27 PM 18,094 3

OVER 3,600 CUSTOMERS have been affected by the collapse of six travel agents in Ireland since the outbreak of the Covid-19 pandemic, according to the Commission for Aviation Regulation.

The regulator said it had to apply to the Department of Transport, Tourism and Sport last year for €1.4m to top up the fund established to compensate holidaymakers in the event of travel firms going out of business.

CAR commissioner, Cathy Mannion, said cash reserves in the Travellers’ Protection Fund would have been insufficient to compensate all claimants arising out of travel agents which collapsed last year.

However, Mannion said the CAR had concluded that the receipt of the additional resources would allow the fund to operate as a going concern.

The latest accounts for the Travellers’ Protection Fund show its cash reserves shrank by 1% to just under €1.3m at the end of 2019 with collapse claims and administration costs totalling just over €6,000 for the year.

The payouts in 2019 related to claims arising from the collapse of three travel agencies – Premier Irish Golf Tours of Tralee, Co Kerry; Heffernan’s Travel, Cork and Sindaco which trades as Fanfare, Irish Film Tours and Buzz Travel. Almost €270,000 had been paid out from the fund in relation to the same three firms the previous year.

In recent years, the CAR has paid out over €5m from the fund, including over €3.5m to around 4,200 claimants after Lowcostholidays.ie went out of business in July 2016 when the company’s bond was insufficient to cover the extent of claims.

Since its introduction, the fund has paid out €15m to approximately 11,000 claimants. Only 62% of claims were covered by bonds held by travel agents and tour operators.

No contributions have been sought from the industry to replenish the TPF since 1987 as it was felt funding levels at the time were adequate.

However, the size of the fund has been reduced by almost 80% in the past decade to its current level of approximately €1.3m.

The six travel agents which collapsed last year were Rathgar Travel, Rathgar, Dublin; East West Travel, Roscommon; USIT Ireland, Dublin; Fly Away Travel and Cruises For You, Ballina, Co Mayo; Planet Travel, Kells, Co Meath and SunSearch Holidays, Malahide, Co Dublin.

USIT, which specialised in holiday packages for students, accounted for the vast majority of customers seeking refunds with almost 3,000 claimants.

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The CAR announced last week that another travel firm, DK Travel of Nenagh, Co Tipperary had ceased trading on 12 February.

The CAR pointed out that the Government had also introduced a scheme last June that would protect refund credit notes issued by licensed travel agents and tour operators.

Customers who voluntarily accept refund credit notices as a result of holiday packages being cancelled due to Covid-19 travel restrictions will be able to book another package holiday in the future which provides protections in the event of the future collapse of a travel agency.

Implementation of recommendations made by CAR to the Government to double the existing bond paid by travel firms as well as the reintroduction of an annual levy to boost reserves of the TPF have been delayed due to the pandemic.

The size of the bond is based on a percentage of projected annual turnover and is currently 4% for travel agents and 10% for tour operators.

The proposals have been criticised by several leading travel firms including TUI and Trailfinders.

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Seán McCárthaigh

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