Who's Zooming Who?
And who's next?
“It will happen again.”
Considering those words come from a man whose company stopped selling Zoom Airlines tickets on June 4, nearly two months before the carrier went belly-up, Canadians would be wise to listen.
Max Johnson is president of The Great Canadian Travel Company. With over 25 years of experience in the industry, Johnson has seen a few Canadian airlines come and go. But what is it he sees that others – even those with a mandate to do so – don’t seem to notice?
“I’m not prescient,” says Johnson. “There are always warning signs.” For Johnson, the Zoom red flag went up when U.K.-based insurer International Passenger Protection pulled its ‘Scheduled Airline Failure’ coverage from Zoom on June 2. The stated reason: the airline “no longer met its underwriting criteria.” The next day, the 150 members of Britain’s Association of Independent Tour Operators were informed of the situation, and Johnson says many of them stopped selling Zoom right away.
Here in Canada, however, consumers continued to book directly with Zoom, tour operators continued to sell Zoom flights, travel agents continued to book them for clients demanding inexpensive flights, and just about everyone professed shock and surprise when Zoom went boom.
The Canadian Transportation Agency has a federal mandate that includes “protecting consumers by minimizing disruptions in service.” Its response to Zoom’s August 28 flame-out: “We were caught by surprise,” said spokesman Jadrino Huot.
Conquest Vacations, which sold Zoom’s summer and fall transatlantic flights, said it was similarly caught flatfooted by the Zoom failure. “As you know, there are constantly rumours flying around (no pun intended) in this business. Although we watch everything as closely as possible, Zoom was a little bit tougher as they were a privately held company so their financial status was concealed.” As Conquest’s Vice-President of Sales & Distribution Brent Carnegie told TakeOffeh: “In this case there were no advance warnings whatsoever that anything was amiss.”
Johnson is surprised by these responses, especially from the CTA. “Zoom’s industry insurance was lifted on June 3, and this is an extremely serious circumstance. Clearly the CTA should have some discreet channels to follow up on these issues. They might also try reading newspapers, and deliberate on how a relatively small carrier can pay the increasing fuel bills. You’d think there would be a network around, at levels much higher than mine, which would talk about these things.”
Many Canadian consumers want cheap flights and bargain basement packages to sunny destinations. Johnson says today’s travellers “know the price of everything and the cost of virtually nothing.” They believe the low-cost advertising from airlines even though it often represents only a fraction of the final price of a ticket. Being Canadians, he says, they also believe that someone else will come to the rescue of their funds when an airline or tour operator goes down. In many cases, they are counting on credit card companies to refund the price they paid for Zoom tickets. In fact, the credit companies probably will, because Zoom was small fry and paying out maintains what Johnson calls “a veneer of protection.”
Johnson says U.S.-based United Airlines “is the one that really scares me.” He believes the writing is on the wall for that carrier, and asks the question, “Do you think credit card companies will refund consumers for United flights if it goes under? That could be billions of dollars.”
With the prospect of another ultra-competitive year ahead for Canadian tour operators in the winter sun market, Johnson sees the potential for another major failure. “What’s different today is that the power of the large tour operators [there are three that control a major chunk of the market] is so much greater than the smaller ones. And the big ones could put the independents out of business. The simple fact of the matter is that airlines and tour operators with charter airlines require enormous amounts of capital. If they have it, you’re probably well off. If they don’t…it’s anybody’s guess.”
Johnson shares many of his views with readers of the Winnipeg Free Press in a blog titled “Globetrotting." He ended his June 4 entry titled “And Now Zoom?” with the following lines: “The business here is purely, simply and completely ‘buyer beware.’ So, now you have been warned.” Canadian government officials, travel industry members and consumers didn’t heed the warning last time. Maybe next time will be different.
By Bruce Parkinson
http://takeoffeh.com/readarticle.php?article=1965
Topic: Who's Zooming Who? (Read 3744 times)