The UK outbound travel market suffered another sharp blow following the collapse of Goldtrail Travel leaving tens of thousands of passengers stranded over 16-19 July 2010, affecting around 50,000 holidaymakers overall and causing major upset.

However, the significance of Goldtrail’s failure is not down to its size as its customers represent less than 1% of UK outbound departures. Instead, its demise is a warning sign to other travel companies that the industry is not out of the woods yet.

The company’s failure comes at a time when the UK outbound volumes will decline further by 6% this year to reach 55 million and positive growth will not return until 2012, according to Euromonitor International.  Many consumers are abandoning holidays abroad as austerity measures and rising unemployment kick in, whilst the threat of a double-dip recession becomes more of a reality in the UK, Europe and beyond.

The CAA stepped in to rescue stranded passengers under its ATOL scheme, highlighting the importance of consumer protection. The high profile collapse of XL and Flyglobespan, coupled with the recent volcanic ash crisis, have hit home to consumers the need to look closely at the terms and conditions before undertaking any foreign travel.

There will be some winners. In the immediate aftermath of a company ceasing trading, the industry rallies round to ensure travellers are repatriated, however, as the dust settles, spare capacity can be picked up by competitors as weaker companies go to the wall. With the likes of Ryanair entering the Greek market, price competition is going to intensify.  However, Greece still faces the tough task of reassuring international visitors that it is a secure destination to visit as strikes and civil unrest unfold.