TRAVEL agents' associations have warned that companies offering discount travel deals are travelling down a "dangerous route" towards potential losses and collapse.
Their remarks followed last week's announcement that Discount Travel Ltd, of 4 South Great George's Street, Dublin, had ceased trading because of financial difficulties. The Department of Transport, Energy and Communications said that several hundred" people were affected.
Mr Brendan Moran, chief executive of the Irish Travel Agents' Association, warned that the discount travel route was a dangerous one to take. "There is a cultural factor there that should be a lesson for every agent, whether or not they are ITAA members, and that is that the term discount is a dangerous term to use in the retail travel business where gross margins vary between six and 10 per cent," be said.
Discount Travel was not an ITAA member.
Mr Ernie Mooney, group spokesman for Travelsavers, the country's largest group of independent travel agents, said the collapse was "the inevitable result of the policy of discounting the entire gross margin available in the industry.
Discount Travel had been in operation for over two years and had expanded rapidly between late 1994 and early 1995, with four shops in operation in Dublin by 1996. According to one travel agent, it was based on the English model which involves bringing in a large volume of business to make up for low profit margins.
Discount Travel is believed to have operated at a lower than usual profit margin, keeping staff costs to a minimum and trying to attract more customers through low cost deals.
"While this policy was supposed to provide the paying public with better value, it has in fact resulted in hundreds of people being left waiting in line for a refund of monies paid to the company and widespread disruption of holiday and travel plans," Mr Mooney said.
Those who are already abroad and in the middle of holidays should not worry, according to the Department, as their travel arrangements are safe. Customers who have booked and paid for holidays will have them looked after by the Department under the statutory scheme to safeguard customers of bonded travel agencies.
Under the provisions of the scheme they may take their holidays where possible or otherwise claim a refund.
Those who have paid deposits on holidays will have these refunded or they may be given the option of similar holidays with another tour operator.