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Over 40 travel agencies failed in 2011 die to disasters and downturn

Natural disasters, the Arab spring and the economic downturn, which caused price hikes in internet bookings, worked together to bankrupt 41 British travel agents during 2011, according to research.

The disastrous year for the travel sector has aggravated the debt for the compensation pool designed to protect holidaymakers when travel operators fail. The Air Travel Trust (ATT) Fund now has a £42.3m deficit, which is a 33% increase from last year.

With Thomas Cook having to go through dramatic restructuring plans and with various tour operators (including Dream Holidays and Holiday 4 UK) terminating trading this past year, the travel industry is suffering greatly, according to Anthony Cork, who led the study.

Higher inflation and lower real incomes have greatly affected consumers’ spending, while rising unemployment continues to worry many people about job security. This explains why so many are postponing their holidays or are downsizing their vacation plans, say experts.

Researchers added that the Middle Eastern revolutions and Asian floods have also hit bookings, particularly for popular package destinations such as Egypt, Morocco, Tunisia and Thailand. However, travellers seem to be bypassing traditional operators in order to tailor their own holiday packages through the internet.

According to Cork, the internet has turned upside down the business model of traditional tour operators. He said that people are becoming more and more confident in booking holidays over the internet rather than from a tour catalogue months in advance. Holiday goers are becoming adept with finding low-cost airlines and configuring the logistics themselves, including finding last-minute offers for travel and hotel deals.

The researchers state that the Civil Aviation Authority, which regulates the ATT fund, will be pressured to stop the deficit by raising the levy, which is now at £2.50 for each holiday package.

If the insolvencies continue to rise within the travel industry, the tariffs will inevitably increase, say the experts. Travel companies will then raise their fees to reflect the levy rise, which would make it even pricier for clients to go on holiday.

The gloomy review of the fiscal year by Wilkins Kennedy was a separate study, which saw Britons booking a rising number of holidays within the United Kingdom in 2011. Britons made 7% more travel bookings within the UK than in 2010, according to a survey by Turkey and Spain gained more British visitors as holidaymakers turned away from many North African nations. The most popular vacation spot was southern England, with London coming in second.





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