CONSUMER PROTECTION:AT LEAST 15 Irish-based travel companies may be forced to close this week due to difficulty in securing bonds from financial institutions ahead of today's licensing deadline.
So far 15 agencies have indicated they will not be in a position to secure the insurance bonds they need ahead of today’s deadline to retain their trading licences. It is illegal for the agencies to trade without the bonds in place.
Alan Richardson, the Commission for Aviation Regulation’s licensing manager, said he understands that 16 companies will not be registering for the travel sector’s bonding scheme in the run-up to the autumn round of licensing, and that 15 of them attributed this to the difficulty of securing the bonds that would protect their customers should the companies go out of business.
“There is a very small number who we think they will be unable to secure a bond,” Richardson said, adding that of 206 companies that were renewing their licence in the autumn round, 180 companies had secured bonds, 10 had yet to finalise their application and 16 had indicated that they would not be renewing their licence.
Customers who have booked through these companies before the autumn deadline will be secured under the previous bond.
All tour operators and travel agents trading in Ireland must be licensed and bonded to sell overseas travel. Tour operators are required to post a bond of 10 per cent of their licensable turnover to the bonding scheme; travel agents must be bonded for 4 per cent of revenues.
The chief executive of the Irish Travel Agents Association, Simon Nugent, said he was aware that some smaller agencies were having difficulty securing bonds from banks and other financial institutions in the current economic climate. “It’s no surprise given the state of the economy and the state of consumer spending,” he said.
He added that smaller firms, with two or three employees, were particularly affected. “There are quite a few examples of companies like that who have decided to call it a day this autumn because turnover isn’t there.”
Nugent moved to reassure people who were planning breaks. “Customers who book their holidays with licensed operators can expect the same level of consumer protection as they always had.”
Twenty-two travel companies have collapsed since July last year, with a compensation cost of about €4 million; half came from the bonding scheme and half came from the Travellers’ Protection Fund.