Budget Travel Closes

By | Category: Travel news

In Ireland, Budget Travel is the tour operator. At one point, it carried over a third of all Irish holidaymakers who went abroad which probably amounted to over 400,000 people per year. On Wednesday evening they called in the liquidators.

As in the UK, there is a bonding system operated by the Commission for Aviation Regulation (CAR) so most, if not all of the money put down by holidaymakers will be protected.

Those of you who have paid deposits or have fully paid need to download an 8 page claim form which can be found at www.aviationnreg.ie.  On the website, click on the release about Budget Travel and the click on claim.

Budget was founded back in 1975 so, for the travel industry, it has quite a long pedigree. What caused it to go to the wall? Certainly the downturn in the Irish economy curtailed the number of holidays that were taken. Some say its business slumped by 50% in 2009. Their forecasting seems to have been optimistic and they didn’t cut back quickly enough but there is another reason that the regulators both on that side of the channel and this should look at.

 In a bonding system you estimate the number of passengers you will carry and then you have to lodge monies to cover all of those passengers in the event that the company goes bust. Overestimate and you pay the bonding scheme too much. In the case of Budget it looks like €4 million too much was lodged. That alone can make a big difference to whether you survive or not.

The effect on Ireland will make people wonder how secure other tour operators are but, as has been proved, if they are covered by the CAR, then the money of holidaymakers should be protected. Just not the inconvenience of having to claim and rebook at possibly higher rates. And for other tour operators, it will mean that a lot of competition has just gone out of the market so prices might rise for 2010.

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