Friday, September 12, 2008

XL: bad for consumers, good for the business?

The collapse of XL Leisure Group this morning is clearly bad news for the 85,000 people currently overseas and the 200,000 or so people who have forward booked (according to BBC figures).

For the trade however, it’s less cut and dry. It might even be “a good thing”.

XLLG is the third largest tour operator in the UK, which makes the collapse front page news. However much we liked Silverjet, it was never carrying 2.3m people a year. XLLG’s product ranged from traditional fly-and-flop to private jets and boutique hotels, so expect tabloids and broadsheets alike to go to town on this tomorrow.

[At the time of writing, the news is the most read story on the BBC site]

It’s difficult to talk about this being good when there are parents telling their children that their holiday have been cancelled, surprise 40th birthday weekends scrapped  and XL employees and suppliers worried about getting paid.

But one good thing is that this massive collapse should, once and for all, alert the UK public to the vagaries of consumer protection. XLLG has, or rather had, a divergent business which is proving to be a real-time case study in what is and isn’t protected.

Surely now is the time for the CAA and ABTA and other bodies to get their act together and kick-start some serious press and PR on this issue. If the public aren’t aware of the difference between a bonded package holiday and a self-assembled break after this collapse, they never will be.

There aren’t too many tears being shed at the HQs of TUI and Thomas Cook. The collapse means that significant capacity has been taken out of the W08/9 and S09 seasons, which will have the revenue management teams whooping for joy.

Investors might also be similarly whooping. At 10.30am this morning – two hours or so after the news broke – Thomas Cook shares had climbed 6.38% on last night’s close; TUI was 5.75% up.

The reasons give by XLLG for its demise are the usual suspects – fuel prices, economic downturn and the inability to get additional funding. Interestingly, XLLG’s French and German operations are not being taken to into administration. It remains to be seen if this is an indication that the UK’s travel market is more vulnerable than the rest of Europe.

Martin Cowen, chief writer, Travolution

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