Hays Travel Independence group members were reassured that the group has insurance in place sufficient to cover the entire cost of replacing Monarch flights.
John Hays, managing director of the UK’s largest independent travel agency group said, none of its consortium members should lose out following the collapse of Monarch.
He was speaking on the first day of the Independence Group conference in Marbella, Spain, where he said Hays Travel had had a “fantastic year”.
However, he said that was not true for everyone in the industry including Monarch and A1 Travel, which failed last week and was said to not have had supplier failure cover for Monarch.
“It appears A1 did not take out supplier failure insurance, so when Monarch went down under Flight Plus arrangements…they were having to pay for all extra flights to fulfil their obligations.
“Clearly the directors must have looked at the situation and realised that they could not afford to do that.”
Hays said other companies will have supplier failure cover but only sufficient to cover the cost of the original Monarch flight and not the higher prices they have had to pay to re-protect customers.
He said the main beneficiaries of the Monarch failure has been the likes of Tui, Jet2.com and other airlines which have seen prices rise “because of supply and demand, and that’s understandable”.
“There must be lots of agencies out there with supplier failure cover but it’s only going to cover the them for the Monarch flight.
“I suspect there are quite a lot of agencies who do significant volumes of Flight Plus who might be feeling the pinch right now,” Hays said.
Hays added: “Our stance for the IG group and the group as a whole is to take out supplier failure cover that not only covers the cost of the flight component but also the total cost of an alternative.
“So our members are covered for the whole amount. That’s a lot of comfort. Theoretically none of us in the group should lose money from the Monarch failure.”
Hays said in addition Hays will also help members to cope with the cash flow issues of having to buy new flights before they receive any insurance money.
“It’s a big failure; the insurers are going to be swamped. After Lowcost Beds went down our insurers withdrew from the market the very next day and once they did there was no incentive to give good service
“Getting the final money is going to take a lot of effort. Companies go bust when they run out of cash. We will bear the cash flow costs and we will not go back to our members to ask for the money for the flights.”
Hays said other consortia have not taken the same view and he “sees stress” for them from a timing and cash flow point of view.
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