What Now For Package Holidays?

Posted on: 19 September 2008 by Gareth Hargreaves

Is there a future for the package holiday? How can you get your money back after a travel company collapse?


The collapse of the UK's third largest package holiday group XL has thrown the spotlight onto other holiday companies.

The decision to place XL Leisure Group into administration left thousands of staff facing the axe, and many more holiday makers stranded in Europe and the USA. But how will this impact on the package holiday trade in general?

What now for Package Holidays following XL’s collapse? Tim Williamson is from Tui Travel, the group behind First Choice and Thomson, and he has some answers.

September has left almost 278,500 holiday-makers stranded abroad, and a whopping 218,500 people with unusable tickets looking for ways to get their money back. Following the collapse of holiday firms XL and Seguro, and Zoom airlines, consumers should think carefully about protection when paying for holidays.

Those who purchased a package deal will benefit from ATOL (Air Travel Organisers' Licensing) protection, but those who booked their own flights and bypassed agents - at least 10,000 in the case of XL - will not benefit from this type of protection and could have lost their cash.

The number of holidaymakers protected by ATOL has shrunk from 98 per cent in 1998 to less than 61 per cent this year, according to Holiday Which? This is due to the increased number of people arranging their own trips.

However there's good news for customers who purchased their flight using a credit card, says Simeon Linstead, Head of Personal Finance at uSwitch.com.

"A refund should be quite straight forward. Credit card purchases are protected by section 75 of the Consumer Credit Act. This protection means the card company is jointly liable for the purchase and you have a legal right to a refund."

Section 75 covers purchases in the UK or abroad costing between £100 and £30,000, goods that don't turn up, those that turn up damaged or, in this case, if the company is unable to fulfill the order because it goes bust.

Unfortunately the majority of debit card holders are likely to find they do not have any protection at all, but Visa is an exception.

"Some consumers may not be aware that should you be the owner of a Visa debit card you have similar rights to those with a credit card, in what is known as a chargeback scheme. Unlike the credit card protection there is no minimum or maximum limit on the purchase, however you must apply for compensation within 120 days of the date the goods were due to arrive."

Is there a future for the package holiday? Has your holiday been cancelled?

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