Not on the Goldtrail . . . (Taylor on Travel)

Not on the Goldtrail . . .

The demise of Goldtrail Travel is not good news, and not just for the tens of thousands who have had trips cancelled or faced hoteliers' demands for payment. The company may pass unlamented by some in the industry, but the bill for its passing will be substantial.

The figures are so far provisional - the Civil Aviation Authority hopes to clarify these soon - but we can assume close to 16,000 people were abroad when the company collapsed and up to 50,000 more had holidays booked. Some bookings will be flight only. Many more may be covered by other Atol-holders - at a hefty cost to some of these.

This does not put the failure on a par with XL Leisure, but it is the biggest in many years aside from XL. How much is it likely to cost?

Flyglobespan went down last year with 1,000 abroad (cost of repatriation £840,000) and 9,000 bookings (£2.9 million in refunds). The combined bill of £3.7 million was more than covered by Flyglobespan's bond with the CAA.

Goldtrail did not have a bond.

Scottravel, which also failed last year, did not have a bond either. It failed with 1,300 abroad (cost of repatriation £540,000) and 15,000 bookings (refunds £3.7 million). That £4.3 million bill will fall squarely on the Air Travel Trust fund.

It seems reasonable to assume Goldtrail will cost more than either of these failures. The repatriation bill should be lower, pro-rata, than Flyglobespan's because Goldtrail clients flew on other companies' aircraft - there has been no need to arrange alternative flights. So Scottravel provides a possible guide on repatriation costs. The Goldtrail bill for bringing home more than 10 times as many passengers might be 10 x £540,000 or £5.4 million.

The refund bill for Flyglobespan approximates to £322 per booked passenger and for Scottravel £247. That is not much for a week in the eastern Mediterranean, which is where Goldtrail customers were headed, but let's take a mid-point figure (£285) - and allow for the fact other Atol-holders will foot some of the bill. So we might estimate the cost of refunds at perhaps 40,000 x £285. That is £11.4 million.

This back-of-an-envelope calculation puts the possible cost of the failure to the Air Travel Trust fund at £16.8 million - enough to wipe out entirely the improvement in the fund's deficit in the financial year to April. At even two-thirds of this amount, it will be a hefty bill.

The Air Travel Trust fund will not now escape from debt next year. The deficit will continue at least into 2012 and, with it, the £2.50 Atol Protection Contribution on bookings - unless the move to an extended Atol scheme, and thereby extended contributions, comes first. That appears unlikely.

The timing of Goldtrail's failure is a particular concern - as is the lack of close involvement of the CAA consumer protection group in the days and hours leading up to it. To say this looks odd is an understatement. Let's hope the timing is not a sign of things to come - and that my maths needs attention.

Posted by Ian Taylor on July 20, 2010 7:38 PM | Permalink

TrackBack

TrackBack URL for this entry:
http://blogs.travelweekly.co.uk/movabletype/cgi-bin/mt-tb.cgi/12176

Listed below are links to weblogs that reference Not on the Goldtrail . . . :

» Could the Goldtrail bill come to £34 million? from Taylor on Travel
Goldtrail is going to prove an even more costly business failure than first thought, and that was costly enough. A tour operator primarily to Turkey, Goldtrail Travel ceased trading on 16 July. The reasons for its failure at the start... [Read More]

Comments (229)

private eye:

seems strange that Viking / Kiss had a large shareholding in GoldTrail, but Viking booted their clients off the flight and made the CAA use alternative aircraft to bring passengers home !

Posted by private eye | July 23, 2010 12:53 PM

Posted on July 23, 2010 12:53

Jeremy:

Hi, your site is so usefull

Posted by Jeremy | September 17, 2011 2:05 PM

Posted on September 17, 2011 14:05

Jpseed: