Victims of Lowcost crash urged to Tweet Balearic Government

A holiday campaign group has urged holidaymakers who have lost money due to Lowcost’s collapse to join a Twitter campaign to force the Balearics government to step in after it emerged the Palma-based company had been allowed to operate with a bond of just €1.2 million.

UK administrators of Lowcost Travel Group’s UK arm said that as the company had collapsed with outstanding bookings of an estimated £50 million, customers would receive less than £10 each compensation.

"It is still early days and so the total level of claims is not yet known. It is only once claims are finalised that a specific figure for the compensation available to individual holidaymakers will become evident," said joint administrators Finbarr O’Connell and Henry Shinners from Smith & Williamson.

However, it believes Lowcost had 140,000 customers when it ceased trading last Friday, 55% – or around 77,000 – of them British, but as the company moved its head office to Palma in 2013, it did not have an ATOL licence so customers are unable to claim compensation from the UK’s £139 million Air Travel Trust Fund.

It is expected to take some time for administrators to unravel the mess left by Lowcost and Smith & Williamson warned that due to the number of customers affected it will take weeks for it to respond to their emails.

To further complicate matters, most bookings from the UK were made through Lowcost’s Palma-based subsidiary Lowcostholidays Spain, which is not yet officially in administration. Once the Spanish – and Lowcost’s Swiss subsidiary – are formally in an insolvency process, customers will be able to lodge claims with those companies, said Smith & Williamson.

"We are doing our best, despite not being appointed as administrators of Lowcostholidays Spain SL, and in the difficult and rapidly changing circumstances, to assist the directors of the remaining companies to achieve the best outcome we can for creditors, including holidaymakers, staff and other stakeholders and to communicate information in a timely manner as it becomes available," it said.

It said updates would be posted on Lowcosts’ website, but it has suggested that as the bond will be insufficient to fully compensate those who have lost money, customers should ‘seek other routes to compensation’.

These could include insurance policies, credit and debit card companies, other consumer protection schemes, and, for those who made bookings through Lowcostholidays Spain, the Balearics Government (Govern de les Illes Balears).

The Govern de les Illes Ballears has set up a webpage to advise Lowcost customers, on which it confirmed that only those who booked through the Spanish subsidiary would be entitled to claim from the €1.2 million bond.

However, Frank Brehany, consumer director of HolidayTravelWatch, which received 120 calls from worried customers within the first 24 hours of Lowcost’s collapse, said the Balearic’s government should be ‘called to account’.

He is calling for the Spanish and Balearic governments to set up a public inquiry into how the Lowcost protection scheme was set up and operated and reviewed since 2013 and, if failure are detected, he said the Spanish state should ‘fully reimburse’ all consumers.

"The collapse of Lowcostholidays once again brings into focus the problem of not having a pan-European consumer financial scheme within the Single Market for holidays," said Brehany.

"Whilst many are pointing consumers to their travel insurance, the administrators, credit and debit card companies, the reality is that they will inevitably point to the Protection Scheme that Lowcost set up with the Balearic Islands Government.

"We have long called for the introduction of a pan-European Consumer Financial Protection scheme for holidaymakers; Member State governments should hang their heads in shame if they objected, because once again, it is the consumer and the ex-employees who suffer most from this political fudge, offered again in the new Package Travel Directive," he said.

Brehany said Lowcost’s collapse had echos of the Clarkson’s failure in 1975. " I would expect and call upon the EU Commission, who are the guardians of the Treaty and its laws, to urgently investigate this failure and the cover apparently now being offered to consumers, along with the role of the Member State.," he added.

"I would also suggest that if the scheme did not offer the same parity, as could be found in other EU Jurisdictions, then the Spanish government has a responsibility to help consumers through the tough unexpected financial period they are now facing, in other words, if failures are detected, I would call upon the Spanish State to fully reimburse all Low Cost Holiday Consumers."