Wafer Thin Margins Blamed For Collapse Of Travel Firms.
For the last two years the travel industry has been under siege and over the last month 3 firms, Goldtrail, Sun4U and Kiss flights have gone under.
The worrying thing is that this is the height of the summer when cash flow for these companies should be at its best and does not augur well for other budget companies operating on wafer thin margins.
Whilst the recession has sucked cash from travel companies it is the ash cloud that has caused many of these companies to fold because they simply ran out of cash. This not only caused them a loss of revenue but cost them funds to pay for hotels, meals and an additional flight back for all those customers trapped abroad.
Whilst these companies add vital competition they simply cannot horde sufficient cash away to survive any protracted downturn or the events we have seen this year such as the BA strikes, ash cloud and airport traffic controller strike in Greece.
Even Kuoni a long established company has just reported half year losses of £23 million with the ash cloud costing £29 million.
The problem with these failures because less travellers use a travel agent more and more consumers are finding to their cost that travel protection outdated with no cover for the majority of independent travellers