Special Report: Agents 'beneficiaries' of Lowcost collapse

Special Report: Agents 'beneficiaries' of Lowcost collapse

Gary Lewis, chief executive of the Travel Network Group, reflects on the fall-out from the Lowcost Travel Group collapse. He spoke to Lee Hayhurst

The "extraordinary" events of July 15, when Lowcost Travel Group ceased trading and Turkey experienced an attempted coup, exposed the increased risks taken on by travel agents in the current market.

That is the view of Gary Lewis, chief executive of The Travel Network Group (TTNG), which comprises 800 independent travel businesses.

Lewis said: "In general the industry has de-risked itself by not taking the same level of commitments on seats and beds as it used to. Big operators are now playing in all markets to spread risk.

"But some of that risk has shifted to small and medium-sized travel agents as they do more dynamic packaging.

"When one element of a holiday fails but the other remains in place, that causes commercial pressures. As a membership organisation, we have to put a lot of safety measures in place to mitigate that risk."

The failure of Lowcost Travel Group in mid-July saw travel firm partners of bed bank Lowcost Beds spring into action with crisis plans, and TTNG was no exception.

Lewis said the failure had an impact on a number of the group’s members, and no sooner were plans in place than the group's bosses were back on a crisis call at 11.30pm because of the coup in Turkey.

He said: "It was one of those days in travel that come every so often. But by any standards it was an extraordinary Friday.

"Then you have the impact of the Brexit vote and the attack in Nice – all these complexities arising within weeks of each other."

However, Lewis suggested the industry is more robust from a regulatory point of view following the lessons learned from the failure of XL Leisure Group in 2008.

He also acknowledged it is the group's role to put in place processes to mitigate the risk for members and to provide support when things go wrong.

But he said commercial realities mean agents will continue to be exposed to risk in working with suppliers like Lowcost, whose business models proved unsustainable, because they have to compete on price.

At the same time, he believes agents can be the main beneficiaries of the cut-throat competition that companies such as Lowcost encourage.

He said: "The more competitive and entrepreneurial the market, the more it drives down price and, while that has commercial risk, the beneficiaries are those who have the relationship with the customer. That can only be great for our members.

"If you have the systems in place to make sure agents do not have to worry about those commercial risks but bring those prices to them, they can reap the benefits.

"I’m not talking about partners committing commercial suicide. We want long-term sustainable relationships with partners and members. [But] by being more than just a commercial and marketing team, we are underwriting their risk."


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