Commentary - XL Meltdown - Corfu Magazine - Vol. 4, No. 2, December 15, 2008
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Corfu Airport Code: CFU
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XL Meltdown - What it means for Corfu...
Was it really such a surprise when the UK's third largest package holiday operator XL Leisure Group cancelled all flights on Friday, 12 September? The truth is that they are only the most recent in a long line of high profile tour operators to go into 'administration'. The demise of this tour operator came suddenly and without warning and left tens of thousands of holidaymakers stranded at Corfu International Airport.
According to a spokesman for the parent company (which includes Kosmar Villa Holidays and served the Corfu market), XL suffered from rising fuel prices, economic downturn and currency volatility, and was not able to receive the necessary funding to continue operations.
Arriving at airports throughout the UK and expecting to head off to holiday destinations, customers were told that their flights had been cancelled. "I was absolutely devastated," said Jim Duwaine from Portsmouth to a BBC reporter. "We got up at midnight planning to go on holiday, but got let down. We're trying to get another flight, but it's not looking good."
Kroll, a UK firm specialising in corporate restructuring, has now been appointed as administrators. "...the administrators are unlikely to be able to trade the business or operate the aircraft" was the statement published on its website.
CEO of BA Willie Walsh told Sky News that he believes as many as another 30 airlines could go into administration in coming months. "We have (already) seen 30 worldwide go. I would be very surprised if it is not something similar to that in the next three or four months," he said.
Meanwhile, some 85,000 XL holidaymakers were stranded at their destinations and left to make their own arrangements to return home. It was estimated that as many as 50,000 XL UK tour operator customers, plus as many as 10,000 others who flew with XL Airways, and 25,000 with other tour operators who shared the XL flights were affected by the sudden failure of the company. XL served 2.3 million passengers last year alone.
So who was protected from financial loss? Those who booked package holidays through one of XL's tour operators are protected by the CAA in conjunction with ATOL (Air Travel Organisers Licensing), which will cover the costs involved in returning them home. But those who booked XL flights and made their own accommodation arrangements are not protected.
Once again, it seems, the average person wishing only a modest and trouble-free holiday is co-opted as large firms and investors seek profit from their misfortune.
To read more on the effects of this incident and others like it, turn to next page.
A 'BUY' RECOMMENDATION FROM ANALYSTS AT INVESTMENT BANK DRESDNER KLEINWORT...
"We view this as good news for the tour operators Tui and Thomas Cook given the likely 20 percent capacity reduction the UK market will now experience in 2009."
Stranded travellers at Corfu International Airport
