Belfast Telegraph

Wednesday 24 September 2014

Fears grow for more tour operators

The collapse of XL is the latest blow to the UK air travel industry which has endured a torrid summer with a number of companies closing down.

Business analysts today warned that the worst may not be over for the industry with more carriers and tour operators expected to go under as the cost of aviation fuel soars.



Budget airline Zoom collapsed last month leaving thousands of transatlantic passengers stranded after flights to and from Canada and the US were grounded as it called in the administrators.



The airline employed around 450 staff in Canada and 260 in the UK.



The company blamed its financial woes on a jump in fuel bills as a result of the high cost of oil.



And earlier this week tour operator Seguro Travel Limited also went into administration.



The company offered package deals to Gran Canaria and Costa Brava from Glasgow Prestwick Airport.



Transport analyst Gert Zonneveld said the massive rise in the cost of aviation fuel had proved decisive in the closure of many airlines.



He said: "We all know that the cost of fuel is one of the main problems faced by the airline industry.



"Quite recently fuel would have contributed about 10 to 25% of cost base.



"But fuel costs doubling has had a massive impact on costs."



Mr Zonneveld warned that more airlines could struggle in the coming months.



He said: "I think we will see more airlines going under, we may also see more tour operators going under."



Large established carriers were best placed to survive the current problems due to their huge cash flows, he said.



He explained: "It has been a bad summer, companies that have gone under in the UK have tended to be younger, smaller companies.



"The larger companies have a lot more cash and are well established and it takes a long time to achieve that."



He said the current problems facing the airline industry were the worst he could remember.



Mr Zonneveld explained "I can't remember it being this bad. There was a sharp decline after September 11 but the industry bounced back relatively quickly."



Difficulties in the tourism industry have been mirrored with problems for business carriers.



Three business class carriers have all collapsed in recent months.



The airlines that failed were MAXjet and Eos, who operated luxury services across the Atlantic from Stansted Airport, and Silverjet, which operated out of Luton airport to the Middle East and to American destinations.



All were faced with the double whammy of the economic downturn and the huge hike in aviation fuel costs.

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