Financial protection boosted after firms fail

Financial protection boosted after firms fail

January is traditionally the time when tour operators compete to lure customers with discounts and offers, but this year many are changing the focus from saving money to protecting it. The collapse of Excel and other, smaller companies last year has increased public awareness of the perils of buying flight-only or accommodation-only deals and of the many loopholes in the Atol bonding scheme.

"Protection" has become the travel industry's hottest issue, with operators desperate to reassure customers their money will be safe. Thomas Cook has launched a new campaign, guaranteeing that every holiday, flight and cruise booked through it - with any company - will be protected if that company fails, while Aito (the Association of Independent Tour Operators) is highlighting the fact that it offers all clients who book with any Aito member 100% financial protection. Thomson, who has rebranded Thomsonfly and First Choice Airways into one airline, Thomson Airways, guarantees financial protection on all its flights.

Advertisement starts

---

---

Advertisement ends

Travel insurance is changing too, with tour operators battling to win consumers by including cover for eventualities such as scheduled airlines failing. Saga has introduced added protection against airline failure as standard in its one-trip and annual policies and all insurance - whether booked through a tour operator, travel agent or insurance company - will now be covered by city watchdog the Financial Services Authority. "This means that now everyone has the same right of comeback if they run into trouble with their travel insurance," says Kelly Ostler-Coyle of the Association of British Insurers. "Before, if you booked your insurance through a travel agent or operator, you had no comeback."

Travel companies are currently discounting heavily which, while good news for consumers, also raises the possibility of further failures. Frances Tuke of Abta says: "Companies are making a lot of noise about guaranteeing all their products and that's clearly because they feel it's going to give them a commercial advantage."

Many people still do not realise that the Atol logo is not a cast-iron guarantee. "If you're not booking a package, our advice is to ask specifically what financial protection is offered," says Tuke. "Don't assume you're covered. It could be a very expensive mistake."

guardian.co.uk © Guardian News and Media 2009