Lowcost failure puts spotlight back on consumer protection
The demise of Lowcost Travel Group has led to calls for a fresh look at consumer protection, particularly when companies are not based in the UK.
Lowcost moved its head office to Palma and was warned at the time it moved package holidays would not be protected in the event of collapse – an issue founder and chief executive Paul Evans refuted, saying the company would still operate under the European Package Travel Directive rules.
Former ABTA chairman John McEwan, who is now chairman of several travel companies, said: "I’m very sad to learn of the demise of Lowcost Travel Group and also surprised, despite external factors, that it failed at this time of the year when cash flow should be very healthy.
"It must have had a very fragile balance sheet. I feel for the 500 staff who have lost their jobs.
"More importantly, I am sorry for the thousands of customers currently on holiday that will have to pay hoteliers directly and over 100,000 customers who had booked only to find that their holiday and probably their money paid, has disappeared.
"This brings into sharp relief the question of consumer protection. The UK leads the way in Europe on travel consumer protection, with ATOL protecting package holidays and flight plus.
"However, there is still much more to do to improve customer awareness of whether they are protected or not.
"Lowcost decided to domicile itself in Spain and whilst the package travel directive applies across the EU, it’s clear in this situation that Spanish regulations are of little or no value to those customers who have lost holidays and money.
"In the short term, we need to create more awareness of the value of ATOL, to allow consumers to be better informed of the protection provided and allow them to make an informed choice.
"Beyond this, the Government together with CAA, ABTA and other industry bodies must take a fresh look at consumer protection, as it relates to UK consumers, particularly when companies are based off shore or are completely outside the scope of consumer protection, including new global entrants such as Airbnb."
Travel Counsellors managing director Steve Byrne said: "This of course raises the issue of financial protection and the importance of ensuring every traveller is protected when they book their trip.
"We have always been particularly passionate about this subject, which is why we launched our own financial trust to protect all customer monies and alongside ATOL ensures that our customers always have financial peace of mind.
"This should really be a given and not a luxury, but unfortunately many Lowcost customers who booked directly may now be suffering because they were not fully financially protected.
"It is very sad news for many thousands of Lowcost customers and also the 450 staff that have been made redundant, and the industry needs to take measures to ensure something like this does not happen again."
Lisa
Lisa joined Travel Weekly nearly 25 years ago as technology reporter and then sailed around the world for a couple of years as cruise correspondent, before becoming deputy editor. Now freelance, Lisa writes for various print and web publications, edits Corporate Traveller’s client magazine, Gateway, and works on the acclaimed Remembering Wildlife series of photography books, which raise awareness of nature’s most at-risk species and helps to fund their protection.
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