Could the Goldtrail bill come to £34 million? (Taylor on Travel)

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Could the Goldtrail bill come to £34 million?

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 of the school summer holiday have still to be clarified, as does the whereabouts of its owner and sole director. So let's stick to what we know.

Initial estimates that the company had 50,000 forward bookings and up to 16,000 holidaymakers abroad were wide of the mark. The Civil Aviation Authority subsequently arranged the repatriation of 20,500 customers and reported "nearly 112,000 disappointed by missing out on a holiday".

The CAA's decision to arrange refunds for customers regardless of whether they booked a package holiday - and to split the cost with ATOL-holding companies - was welcome. But it will push up the cost to the Air Travel Trust fund.

(Note: not ALL Goldtrail clients will be refunded. Those who bought a flight with Goldtrail from a retailer outside the ATOL scheme may miss out. The CAA has yet to decide.)

My previous guesstimate of the cost to the fund was about £16.8 million, based on three assumptions: that the cost of repatriation would be similar, pro rata, to the bill for Scottravel which failed last year with 1,300 abroad; that the bill for refunds might come in somewhere between those for Scottravel and for Globespan, the other significant failure last year; and that the fund might reimburse about 80% of bookings.

Let's stick with those assumptions. Scottravel's 1,300 customers cost £540,000 to repatriate - about £415 apiece. If Goldtrail's 20,500 cost about the same, the bill could be £8.5 million. Those holidaymakers are home and the bills paid so we should know soon enough.

Scottravel refunds worked out at £247 per passenger and Globespan £322. If we split the difference and assume £285 per person for Goldtrail (refunds per booking must be higher), we get a bill of £31.9 million.

We can assume the fund won't pay out fully to everyone - some bookings won't have been protected, others will be met by a combination of the CAA and ATOL-holding travel companies that took Goldtrail bookings. But even if we stick with 80% of forward bookings at £285 apiece, it comes to £25.5 million.

So, the bill for Goldtrail's failure could be close to £34 million.

That is uncomfortably near to the total amount paid into the fund through ATOL Protection Contributions (APCs) on holidays in the last financial year - £35.7 million. There is no cause for panic when perhaps £50 million will be paid in over the course of this financial year - assuming there are no additional major failures. But then who foresaw Goldtrail as a major failure?

Just don't expect the APC rate to change any time soon.

Posted by Ian Taylor on August 5, 2010 12:13 PM | Permalink

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Comments (417)

shaun:

The tour operator i booked my holiday with (Holiday Mate ltd) who went through Goldtrail to book my flights have refused to offer any refund. It is prooving a nightmare to get any type of refund and im now left £900 down and no holiday. I have raised a claim through CAA 4 months back and still have had no response to whats happening. Next time i will make sure i go through a major tour operator like Thomas Cook.

Posted by shaun | November 10, 2010 10:13 AM

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