Bed banks fear hike in consortia costs

Bed banks fear hike in consortia costs

Bed banks are concerned that travel agency consortia will use the new Flight-Plus Atol regulations to insist on more generous commercial terms due to the cost of compliance.

Steve Endacott, chief executive of On Holiday Group, a supplier of hotel beds to the dynamic packaging market, made the claim in a discussion on Atol at Tuesday’s annual Barclays Travel Forum.

He said: “Consortia are basically hard for people to move between and it would be fairly easy for them to say to the bed bank suppliers we want an increased override to sell your products.”

Hays Travel managing director John Hays refused to discuss commerical arrangements on stage, but said the group had set up an arm to offer Flight-Plus solutions to agents. “We are a commercial organisation,” he said.

Asked if Hays would be profiting from this, he said: “It’s a thin margin operation. It’s brand new and we are taking risk but we think we can already see there is a demand for the product.”

Endacott, an outspoken critic of the Atol regime and Flight-Plus, said he was now less fearful that a collapse of a single airline could take the whole industry with it.

“Agents have to have insurance policies to cover off the risk. Interestingly these markets are beginning to free up. Insurers are a lot more willing to come into the market at a sensible cost.

“I’m less concerned that one major airline could wipe out the entire industry.”

Richard Jackson, group director of the consumer protection group at the CAA, confirmed the rules mean agents are obliged to reimburse customers for airline flights in the event of a collapse.

But he said if they sold flights from an Atol-holding airline they would be reimbursed, otherwise they should have insurance or simply refuse to sell airlines at risk of going out of business.

“The rationale behind making agents responsible for the payments of Flight-Plus was to introduce greater responsibility of the agent to choose particular airlines,” he said.
“The biggest risk to the Air Travel Trust Fund [that backs Atol] has been Atol holders selling flights we do not regulate.”

Endacott said the only sensible path now was for travel firms to comply with the Atol regulations. “The days of arguing have gone. There is a general acceptance that it’s here and you better get on with it. Non-compliance is not a sensible option.”

Asked about a loophole that allows firms based offshore to avoid having to protect Flight-Plus sales, Jackson said he doubted whether firms could use the EU Services Directive to dodge domestic legislation.

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