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In an unprecedented turn of events, FTI, Europe’s third-largest tour operator, has announced its collapse, sending shockwaves throughout the travel industry. The news has left travel agents, tour operators, and suppliers scrambling to assess their financial exposure and protection measures. This dramatic development raises questions about the sustainability of current business practices within the travel sector.

Koert Grasveld, a spokesperson from B2B travel payments specialist Terrapay, commented: “Travel agents and tour operators everywhere are under huge and ever-increasing amounts of pressure to advance pay hotel chains, single property owners, and many other suppliers of services. This undoubtedly will have played a big part in today’s news.”

Grasveld further emphasized the urgency for those within the FTI ecosystem to understand their financial standing and the protection they have in place. He noted, “Those who have been using virtual credit cards to transact with FTI will find themselves having much greater protection than anyone using old-fashioned bank transfers. Certainly, anyone using prepaid virtual cards, as no fictive money would have been loaded on the card if the service had not been consumed yet or was due payment.”

This collapse signifies a significant blow to the travel industry and highlights the crucial role of modern payment technologies. Grasveld warned that even those specific to financial protection might face a busy few weeks with refund requests and charge-backs, resulting in significant back-office administration unless they have up-to-date, automated systems. “If COVID wasn’t a wakeup call, then perhaps this will be to make sure that travel companies invest in robust B2B payment technology,” he added.

Morgann Lesné from travel M&A investment bank Cambon Partners provided further insights into the situation: “Most considered FTI too big to fail and therefore would not have seen this coming today. Right now, a lot of those B2B suppliers will be urgently confirming their exposure and legal situation. They can guess, but it might take days to work through to an absolute figure.”

Lesné also hinted at the possibility of a rescue operation: “We shouldn’t count the company out completely, as it is just possible that a white knight will come in to rescue the company – or even the German government, who stands to lose much with this. Certainly, in terms of its strong asset base, we’ll quickly see bidders for its extensive business lines.”

Due to FTI’s collapse, competitors will likely conduct speedy analyses to capture its customer base. Lesné predicted, “Watch out for lots of talk about that publicly via targeted advertising and PR, as well as with investors. Perhaps in the next 24 hours, things will move fast in these situations as there is so much at stake.”

Sami Doyle, CEO of TMU Management – a data-driven insurance intermediary specializing in travel – also shared his perspective. “Very sad to see the news about FTI today, but it was well known it had been under some pressure for a while now. The circumstances of its failure, despite recent investment, raise some questions,” Doyle stated.

He pointed out the significant pressures placed on travel companies by suppliers and questioned the sustainability of such practices. “Mainly, does it really serve suppliers to travel companies to place pressure on payment terms knowing that online travel agencies and tour operators will struggle to pass these terms onto their customers? Online travel agencies and tour operators rightly get criticism, but the vast pressures associated with managing the consumer and their monies get overlooked. They get caught in the middle.”

Doyle emphasized the need for regulatory intervention and proper insurance measures to prevent such scenarios in the future. “Regulators should have stepped in to provide assurances, and insurances should have been in place to cover the supply chain. Had this been so – and effectively communicated – today’s problem could have been completely avoidable,” he concluded.

The collapse of FTI serves as a stark reminder of the travel industry’s fragility and the critical importance of financial protection and modern payment technologies. As the dust settles, the industry will watch closely to see how the situation unfolds and what steps will be taken to prevent similar occurrences.