Kiss Flights Closure May Trigger Domino Effect

More company failures in the travel industry may soon follow after Kiss Flights' collapse

Following the recent collapse of Kiss Flights, more company failures in the travel industry may soon follow, a leading accountancy company warns.

Tour operator Kiss Flights which sold holidays to Turkey, Egypt, Greece, and the Canary Islands, collapsed on Tuesday, affecting more than 60,000 customers.

The collapse comes after the closure of Goldtrail in July, who sells low-cost holidays to Greece and Turkey, and Birmingham-based Sun4U, another operator, which folded last week.

This year alone 17 British travel firms protected by a customer-protection system called Atol have gone out of business, according to the Civil Aviation Authority, and even more unprotected companies have also closed.

According to Ian Oakley-Smith, director at PricewaterhouseCoopers (PwC), insolvency cases may reach the high levels of the second half of 2008, when some of the largest tour operators in Britain, including XL, collapsed.

"Traditionally, travel company collapses tend to happen in the autumn when the cash runs out," he said.

"Following a recession and a consumer-credit drought, we are likely to see a bigger spike in travel company insolvencies at the end of this year. Some businesses will not have any cash reserves left to tide them over as they await the next wave of bookings. The collapse of Kiss and Goldtrail will undoubtedly have a domino effect. XL took multiple companies with it in the months that followed its demise,” explains Oakley-Smith

One exacerbating factor to the closures is the growing use of Web-based services, which shifted the preference of customers from protection to prices. Budget tour companies are at an increased risk due to lower margins.

A spokesperson for travel industry association ABTA, downplayed the anxiety over a possible string of failures.

"At this time last year, we had already seen 26 Atol failures. This year, there have only been 17. While the travel industry isn't immune from economic conditions, we find it is incredibly resilient, and so are holidaymakers,” the spokesperson said.

Posted by Sophia Andrews on Saturday August 21 2010, 9:18 AM EST. All trademarks acknowledged. Filed under Featured News, Travel. Comments and Trackbacks closed. Follow responses: RSS 2.0