Lowcost Travel Group collapse – what are your rights?
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On July 15, 2016, Lowcost Travel Group (LCTG) announced its collapse due to the “recent and ongoing turbulent financial environment”.
The news has thrown thousands of holidaymakers’ summer plans into jeopardy, with administrators estimating that approximately 110,000 have a future booking with the provider. A further 27,000 customers were on holiday with LCTG as of Friday.
If you’ve been affected by the collapse, here we explain your rights and the next steps you should take.
Who is the Lowcost Travel Group?
LCTG had four main brands, all of which have been affected by the collapse – Lowcosttravelgroup Limited, Lowcostbeds.com, Lowcostholidays Spain and Hoteling.com. If you have arranged travel and accommodation with any of these companies, it’s likely your booking or holiday plans will be affected in some way.
I’m already on holiday – what should I do?
Flights booked with LCTG should still be valid if you are in possession of your ticket, according to the administrator Smith and Williamson, as payment is usually made directly to the airline at the time of your booking. This should mean that most people will have no issues getting home on their intended date of travel.
However, you may need to pay fees for accommodation, transfers and airport car parking in resort, even if you have already paid through one of LCTG’s brands.
If this situation arises, it is vital that you keep all receipts as you may be able to claim a refund or compensation with either your travel insurance provider (if you have a policy covering end supplier failure) or your credit card company if you paid at least £100 or more for the specific item. You may also have some protection if you paid by debit card under the Chargeback scheme.
I’m due to travel – will I still be able to go away?
As explained above, flights will still be valid and you should be able to travel as planned if you have already received your tickets.
If you’ve not, contact your airline directly to see if your booking has been confirmed – if the reservation hasn’t been confirmed, you’ll have to rebook the flight with a different provider and file a claim as explained below.
Unfortunately, all accommodation (and any other services booked through LCTG, such as transfers) will be cancelled immediately without a refund.
How can I make a claim to recover my losses?
If you have lost money as a result of LCTG’s collapse, there are a number of routes you can take to make a claim, but it will depend on your booking type and situation.
If you booked flights and a hotel together
First and foremost, check your travel insurance policy (if you have one) as it may cover the failure of a travel firm via a clause covering ‘end supplier failure’. If you are unsure, talk to your travel insurer directly.
If you booked with a credit card, and the item you paid for cost more than £100, you may be able to claim your money back from your credit card provider under Section 75 of the Consumer Credit Act.
If you booked with a debit card, you may be able to claim any losses back through the Chargeback scheme – this is not guaranteed but it is worth pursuing nonetheless.
Regarding the Chargeback scheme, trade body the UK Cards Association advises: “Chargeback is not a legal right. You should address a chargeback claim to your debit or credit card issuer, which in turn will put in a request to the retailer’s bank.
“The process for managing these claims is determined by a set of rules from American Express, MasterCard or Visa. There are no guarantees your issuer will be able to recover the money through chargeback, but they will assess your claim fairly. With a chargeback, the value claimed cannot exceed the value of the original holiday that had been purchased.”
The administrator Smith and Williamson has also advised that you raise a claim with Govern de les illes Balears, the regulator of the Spanish Travel Agency.
If you booked a hotel only
As explained above, check whether you are eligible to make a claim through your travel insurance, your credit card or debit card provider.
Customers who booked with Lowcosttravelgroup Limited, Lowcostaviation.com Limited, Lowcostbeds.com Limited or Lowcostholidays Limited are advised to register their claim with lowcosttravelspain@smith.williamson.co.uk. However, Smith & Williamson has advised that it is not the administrators over Lowcostholidays Spain S.L or Lowcost-beds.com AG so will not be responding to claims made about these companies.
How much of my money can I expect to recover from LCTG?
The administrators dealing with the collapse of LCTG have suggested that customers are not likely to recover the full amount they have paid due to the bond agreement the company had with the Spanish regulator, Govern de les Illes Balears.
Compensation is expected to be negligible, with customers said to be likely to recover only around £7.50 each in this way.
However, those who booked with a credit card or who had taken out an insurance policy that included end supplier failure may still be entitled to further compensation.
Am I protected by the ATOL or ABTA schemes?
Not in this case.
Usually, if you book a package holiday in the UK, you will be protected by the UK Civil Aviation Authority’s ATOL scheme should your travel company go out of business before you have travelled.
However, as LCTG moved its offices to Spain in 2013, it is not bound by the same regulation as it does not have an ATOL licence.
LCTG is not a member of ABTA either, the body which represents British travel agents, so there is no protection here either.
I booked via TravelSupermarket – what should I do?
TravelSupermarket showed hotels sold by both Lowcostbeds.com and Hoteling.com which were available on the site before LCTG announced its collapse. If you booked your hotel via TravelSupermarket with either of these brands, you should follow the advice above or call our customer services department if you have any further queries on 0333 123 1983.
TravelSupermarket’s three golden rules when booking a holiday
Bob Atkinson, travel expert at TravelSupermarket, commented: “My heart goes out to anyone who had booked with Lowcost Travel Group and now faces financial loss. While you may be able to recover the money you had paid to the group, you may well have lost your holiday.
“This holiday company collapse really does show the importance of a three-step approach every time you book travel arrangements. Firstly always try and book an ATOL backed holiday which will come complete with an ATOL certificate advising you of your protection.
“Secondly if you cannot book your holiday of choice with an ATOL, then ensure you pay by credit card – as long as the value of what you’re paying for is over £100 you are protected under the Consumer Credit Act. For all further payments make sure you pay either by credit or debit card. Never cash or bank transfer.
“Finally ensure your travel insurance policy comes with ‘End Supplier Failure to give you additional protection from company collapses by being able to make an insurance claim for any losses you cannot recover.”