Freedom Direct failure highlights need for clarity on ATOL bonds

Advantage chief executive John McEwan says the failure of Freedom Direct Holidays highlights the need for clarification on the obligations on agents to acquire an ATOL bond.

Freedom Direct, an online and call centre agency and operator, went into voluntary liquidation but has now been acquired by Hays Travel and continues to trade. Previously it traded as a member of the Advantage consortium.

McEwan said the costs of acquiring a bond in the current climate put extra pressure on agencies, and could have impacted on Freedom Direct.

He said: “I can’t help thinking the obligations of getting a bond was a contributory factor; it’s not easy these days and can work out quite expensive.

“We were quite surprised by what happened. Freedom was trading profitably and had a good set of accounts and balance sheet. It comes down to a broader issue about putting bonds in place, which is something that needs to be looked at.

“You cannot help feeling that Freedom went down the route of getting an ATOL and met all the obligations, whereas there are other agents trading without an ATOL and yet doing the same sort of business.”

He admitted the current court case involving Travel Republic could help clarify the situation, adding: “It may help the overall situation if we can clarify the position on what consitutes a package.”

McEwan said the collapse of Freedom Direct had not had any impact commercially on the consortium, adding that the agency dealt with some of its larger suppliers on an individual basis.

More information:

* Hays Travel buys failed Freedom Direct (Travel Weekly, April 24, 2009)
* Liquidators of Freedom Direct Holidays in talks with interested parties (Travel Weekly, April 17, 2009)
* Freedom Direct Holidays’ failure hits 10,000 bookings (Travel Weekly, April 17, 2009)

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