For the last month or so everything you have read and heard has screamed “the sky is falling in”. However the underlying feeling I picked up at The Travel Convention was that the industry is remaining positive and proactive despite the turbulent times. In the near thirty years that I have advised the travel industry, its amazing resilience and ability to adapt to the changing marketplace has always impressed me greatly.
In the four months since the failure of Silverjet, twenty ATOL holders have failed, the largest of course being the XL Group, but interestingly and surprisingly none in the past four weeks. I, along with a number of industry commentators, felt the XL failure would precipitate more. It still may do and I certainly expect some serious “blood- letting” over the CAA processing of consumer claims from unlicensed dynamic packaging companies. Nevertheless, positive signs despite woeful financial markets.
Five weeks ago on the day XL failed, BA boss Willie Walsh predicted “around 30 airlines will go bust in the next four months”. Perhaps a media attracting sound bite on the same day you announce 1400 potential redundancies but one that has not yet remotely proved to be correct. Unless I am mistaken there has not been one since.
Survival and damage limitation has been paramount for all companies impacted by XL’s demise followed surely now by a period of reflection on the lessons to be learned. Why did so many of the large consortia and dotcom/dynamic package firms allow themselves to be so exposed to a group that has plainly been ailing for many months? Where will replacement aviation capacity come from? Will the “Sharm” market, extremely profitable for many dynamic packaging firms in recent years, continue to be sustainable (XL provided circa 50% of the flying capacity there)? Will the government now see sense and not just burden travel companies with the cost of consumer protection but will include airlines in their consumer protection model?
The economists and accountants at The Travel Convention provided sobering statistics but statistics that nevertheless reflected that life goes on and that people will still be travelling and holidaying. Travel owners and managers will adjust to the new marketplace as it unfolds and business will go on as usual. They will take greater care in assessing supplier risk. Insurers are now bringing to the marketplace supplier failure protection insurance policies that will to a degree take away the uncertainty of the commercial risk of buying cheaper supply from outside the big two! Opportunity will surface and survivors will come through the rigours of this process stronger and better equipped for the future.