A leading travel lawyer has warned holiday makers to double check that they book their holidays through an Atol registered travel company after thousands of customers were potentially left with just a few pounds in compensation after the un-registered Low Cost Holidays went into administration late last week.
It is believed there are as many as 27,000 customers abroad, and 110,000 with future bookings with the company.
Clare Campbell, a partner in the travel team at law firm Leigh Day said that all travelers should be fully aware of whether the travel company they are booking through is registered with the UK Government-backed Atol scheme to ensure their holiday is protected.
Ms Campbell said: “Travellers should look for the ATOL logo in their travel company’s brochures, adverts and websites. Your travel company should also be able to tell you if ATOL protection applies. If they aren’t sure they can check the website at www.caa.co.uk.”
ATOL, which stands for Air Travel Organiser’s Licence, was first introduced in 1973 and is run by the Civil Aviation Authority (CAA). It is funded by contributions from the travel companies, who must pay £2.50 into the scheme for each person they book on a holiday.
By law, every UK travel company which sells air holidays and flights is required to hold an ATOL. However, the CAA said Low Cost Holidays was based in Majorca and was registered with the Balearic Islands authorities, and therefore not part of the UK's ATOL scheme.
If a travel company with an ATOL ceases trading, the ATOL scheme protects customers who had booked holidays with the firm. It ensures they do not get stranded abroad or lose money.
Mc Campbell explained: “The scheme is designed to reassure holidaymakers that their money is safe, and will provide assistance in the event of a travel company failure. However, in this case it seems that the company has not registered and many people will be losing a lot of money through their holiday booking.”
Low Cost Holidays blamed "the recent and ongoing turbulent financial environment" as the reason for its failure.
Smith & Williamson has been appointed as administrator, they told The Times that the company has a bond in place for 1.3 million euro (£1.09 million) - enough to pay out only a few pounds to each customer,
Finbarr O'Connell, of Smith & Williamson, told the newspaper: "There are about 140,000 customers we believe have lost out. Sadly, this means there will be very little back for any claim.”
The UK European Consumer Centre (UK ECC) advised those already on holiday to keep all receipts for any expenses related to Low Cost Holidays ceasing trading, saying it may be possible to make a claim via debit or credit card or an insurer.