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Rise in number of failing holiday companies

The number of tour operator failures has increased and more holiday companies could collapse this year, according to the Civil Aviation Authority (CAA).

It said that 25 companies protected by its Air Travel Organisers’ Licensing (Atol) scheme had failed in the year ending March 2008. In 12 cases, there had to be calls on the Air Travel Trust Fund, a back-up source of funding, to assist the Atol scheme, which helps to bring home holidaymakers stranded if a tour company ceases trading.

The CAA said that, although holiday bookings this summer had held up well, there had been a rise in the number of failures this financial year.

Roger Mountford, the trust’s chairman, said: “An increase in the number of insolvencies is an indicator of tougher trading conditions and may be an indication of a further deterioration.”

The CAA added that the trust’s overall deficit had increased by £1 million during 2007-08 to just over £21 million. New arrangements had been put in place in the event of the failure of a larger tour operator.

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