18 August 2010 Last updated at 14:02 ET

Kiss Flights doubts raised with regulator two years ago

''We were the lucky ones''

Concerns about collapsed travel firm Kiss Flights emerged almost two years ago, the BBC has learnt.

The Cooperative Travel Agency decided not to sell Kiss tickets because of worries about its business model.

Mike Greenacre, head of Cooperative Travel, told Radio 4's PM programme he had raised his concerns with airline regulators when Kiss was formed.

In a statement, the Civil Aviation Authority said that it had looked into the matter at the time.

Kiss, which sold flights on charter airlines, folded on Tuesday, disrupting the holiday plans of more than 70,000 customers.

The CAA, through its ATOL protection scheme, is arranging to bring home travellers and has said holidaymakers will be entitled to refunds.

'Just too cheap'

Mr Greenacre said he raised his concerns with the CAA when Kiss was set up by parent company Flight Options almost two years ago.

He said: "We were sceptical, and that was really based on the fact that we didn't think that the business model... was sustainable.

"The product, the flights in particular, were just too cheap... We took a commercial decision not to sell [Kiss] flights," he said.

Mr Greenacre told the PM programme that he was "surprised" and "concerned" when the CAA gave Kiss a licence to operate.

The CAA said: "The travel industry is a volatile industry. ATOL exists to make sure that people are protected if things go wrong. There are always rumours within the travel industry and the CAA does its best to look into them."

Case study

Clive Rees from Llandrindod Wells in Powys had planned to travel to Turkey with Goldtrail. But when it collapsed last month he rebooked with Air Flights (Kiss Flights).

"I'm really disappointed. You wait for a long time for your holidays and it's gone up in smoke. It's tough.

"It puts us in a bit of a dilemma, whether we book for a third time with another company. We are undecided at the moment."

He added: "Some of the [other travel] companies have put their prices up on the misfortune of people like me, and thousands like me."

• Tourist's second holiday failure
• Kiss Flights collapse: Your stories

Meanwhile, scores of holidaymakers affected by the collapse of Kiss Flights are still awaiting refunds from the failure of another travel company.

Goldtrail, which specialised in holidays to Greece and Turkey, collapsed last month, affecting as many as 50,000 travellers.

Some of these travellers then rebooked flights with Kiss.

Customers should get their money back, although they could face a wait.

Out of pocket

Margaret Cleave, from Glasgow, is among those who have suffered the double disappointment.

She booked originally with Goldtrail and is still waiting for the refund of nearly £1,000 for flights to Turkey for herself and her sister.

Aged 67, but still working full-time in a college office, Mrs Cleave said that she had been looking forward to a relaxing break in the sunshine.

So she was delighted when she was able to book for the same dates in September through Kiss Flights - only to see that travel company fold too.

"We cannot afford to lose any of this money and cannot believe this has happened again," she said.

"We will be a bit wary when we next go on holiday. We will get our money back but do not know when."

Troubles

Kiss sold flights to Greece, Egypt, Turkey and the Canary Islands and an estimated 70,000 holidaymakers have been affected by its collapse.

An estimated 13,000 travellers currently on holiday who had flown with Kiss would get home as normal, the CAA said.

Collapsed travel firms 2010

• Flight Options (Kiss Flights)
• Sun 4 U
• Goldtrail
• International Flights
• Malachite Travel
• Birdseekers
• Wigmore Holidays and Travel (Aspects of Tunisia)
• Finlays Skiing
• Adventura (Pure Escapes)
• Flight Bureau (Think Delta, Think Emirates, Think Flights)
• Love Holidays
• Scantours
• Business Travel Services

Source: CAA. (Trading name in brackets)

In addition, 1,500 Kiss customers left the UK on Wednesday on flights arranged for them by the regulator.

Others, due to fly out after 1800 BST, will get the cost of their flights refunded by applying to the CAA or their credit card company.

Some holidaymakers, however, might currently be unaware that they were booked to fly with Kiss.

"Kiss specialised in selling other firms seats on charter planes, so some people might not know they are booked through Kiss," said Douglas McNeil, a transport analyst at Charles Stanley.

"It may come as a rude surprise [to learn] that they were a customer."

London-based Flight Options, which has owned Kiss since January last year, ceased trading at 1700 BST on Tuesday. It had bought Kiss from a company run by former directors of XL Leisure Group.

Some 85,000 people were stranded when XL collapsed in September 2008.

Kiss is the 13th travel firm to collapse so far in 2010. The economic downturn, as well as a drop in UK travellers going on holiday overseas, has been blamed for some of the failures.

Some 33 tour operators failed in 2009. Many were budget firms working on tight margins.

Last-minute deals

With thousands of people potentially rebooking flights after the collapse of Kiss, there is a possibility that the failure will have a knock-on effect on the availability of last-minute deals.

However, last month a survey suggested that prices of some last-minute package deals to the Mediterranean were being cut by up to a third compared with last year.

This was owing to people deciding to stay at home amid economic uncertainty, the research by Co-operative Travel found.

Last week Europe's biggest travel operator, TUI Travel, reported that booking volumes were about 10% lower in the three months to the end of June compared with last year.

It blamed airspace closures due to volcanic ash, good weather encouraging people to stay at home and uncertainty about the impact of government cuts.