Published on Monday, September 15, 2008

XL collapse highlights UK passenger protection loopholes

The collapse of XL Leisure Group has once again highlighted loopholes in passenger protection regulations.

Those affected who booked package holidays through the group’s ATOL-bonded tour operations should receive refunds or be flown home.

But those who booked flights direct with XL Airways or accommodation with Medlife Hotels will be left out of pocket unless they had the appropriate travel insurance.

Some who paid using credit cards may be protected under the Consumer Credit Act but it depends on the card issuer.

Paul Mclean, director of International Passenger Protection Limited, which offers financial failure insurance, said: "This is a sad and time changing collapse which will have adverse effects on the travel industry for a long time to come.

“Even with oil prices now just over US$100 a barrel, the world facing long term effects from the credit crunch which is hitting banks and their ability to save financially such large operations already in financial problems."

“Luckily many passengers booked an inclusive package which should be covered through the CAA but there will be a huge number of passenger who simply bought flights only and will very likely not be covered highlighting the need once more for agents to protect themselves and their passenger with scheduled airline failure insurance."

"IPP has responded by launching an online holiday financial failure protection website where holidaymakers can purchase a financial protection policy from next Tuesday."

Around 24 airlines that have failed this year including Zoom, MaxJet, Eos, SilverJet, Oasis Hong Kong and Nationwide.

“Consumer protection has always been unclear in this respect and many of us take for granted that we are automatically covered,” IPP said.

“The fact is if you book a holiday independent of a package and a growing number of people are, you could face a lack of financial protection for the elements of your holiday going bust such as the airline."

“There is a form of perception that paying for your holiday by credit card will fully protect you but you are usually only covered for transactions over £100 and if your stranded abroad, credit card companies do not cover repatriation costs which are always far more expensive than the original return ticket.”

A Report by Phil Davies

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