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Competition for early bookings is set to be more cut-throat than ever this year after online travel agents (OTAs) introduced low‑deposit deals.
An arrangement with payments firm Wex has allowed Atol Flight‑Plus package agents to take deposits from as little as £49 per person while adhering to Civil Aviation Authority trust fund rules.
The rules require agents who dynamically package to place all customer money in a trust, even when it’s a booking with a low-cost carrier, which requires the whole fare to be paid up front.
Wex pays for the flight while the deposit is placed in trust. The OTA then repays Wex when the full amount is due from the customer.
Similar to a short-term bridging loan, the Wex deal is available on low-fee virtual debit cards agents use to pay for flights that incur lower charges from airlines.
Among OTAs promoting low deposits are Alpharooms, dnata Travel-owned Sunmaster, Sunshine.co.uk and Teletext Holidays.
Andrew Bigger, head of XML commercial at Alpharooms, said: “Everyone is offering payment deals at the moment to encourage people to book early.”
OTA bosses were not concerned about the risk of cancellations, saying deposits of around £200 are high enough to secure bookings from family groups who tend to book early.
Sunmaster managing director Paul Edwards said: “There is always the question of financial risk, but it’s something you have got to do now.”
Teletext Holidays non-executive chairman Steve Endacott said the move meant tour operators no longer have the peaks family market to themselves.
“It’s removing a reason people have not to book,” he said.
For destinations that see high cancellation levels after terror attacks agents are either not offering deposits or are asking for higher downpayments.