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Voyages FRAM: filing for bankruptcy could make group operators collapse

Losing the deposits paid for group trips


If the HNA and Selectour Afat offer were to be withdrawn, FRAM may have to file for bankruptcy. A failure that may send a shockwave strong enough to teeter many players of France’s tourism sector. Starting with group operators.



The possibility of FRAM filing for bankruptcy can no longer be excluded - Photo DR
The possibility of FRAM filing for bankruptcy can no longer be excluded - Photo DR
In the last few days, doubt has settled around the case of FRAM’s acquisition.

While we thought the buyout of the tour-operator (TO) by HNA and Selectour Afat was moving forward, on Sunday, October 18th, 2015, Les Echos announced that the Chinese group had finally decided to withdraw its offer.

Informations that the tour-operator’s management body quickly denied. And as of now, nothing has yet materialized.

The name of FRAM’s buyer is still unknown.

But now confusion reigns, and the possibility of FRAM filing for bankruptcy is no longer excluded. This would create tremor in France’s tourism sector.

In an interview granted to TourMaG.com on Monday, October 19, 2015, Jean-Pierre Mas, President of the National Union of Travel Agencies (SNAV) believes that “the collateral damages that would be provoked by the business suspension of FRAM could destabilize the entire ecosystem.”

For this reason, he believes that “the rescue of FRAM becomes an issue pertaining to 'public health.'"

Few financial risks for individual stays

The topic is a source of anguish for many travel agencies.

“I am very worried about FRAM’s future, it always provided us with great quality products,” confirms Hervé Renoux, Sales Manages of Richou Voyages, for whom FRAM is the leading tour-operator resold in agencies.

The network is subscribed to TourCom and enjoys the advantages of the payment facility TourFinance for individual stays. It enables tour-operators to pay after the departure of clients and thus protects travel agencies from a possible loss of money in the event of a TO going bankrupt.

“For individual clients, we pay after the clients’ departure. The deposit is with us, meaning that, on this aspect, this wouldn’t be problematic in the event of FRAM going bankrupt,” adds the director of another group who is not subscribed to any voluntary networks.

Meaning that there is zero risk of losing money on the sales of individual trips. “However, it would be terrible to have to relocate clients,” nuances a travel agency director.

Furthermore, FRAM is sometimes unavoidable for travel agencies. For some distributors, it is the only provider of stays. If the TO were to disappear then this would be a true catastrophe for these travel agencies.

“The real issue is that of deposits paid for groups”

In spite of everything, “the real issue is that of group deposits paid in advance. Here, it is riskier,” warns another director of an independent mini-network.

And the question even constitutes a source of worry for travel agencies who are members of voluntary networks. The payment facilities of TourCom and Selectour Afat do not allow the exemption from payment of deposits for group trips.

FRAM, like other tour-operators, demands a payment of 25% of the total amount of the group trip right when the reservation is confirmed. The remainder must then be paid 30 days before departure.

In turn, some group operators are currently deciding to not pay deposits for their group trips at FRAM.

One of them explained to us that he decided to not confirm a trip of 80 passengers with a deposit of €25,000 as long as the Toulouse company’s future is not guaranteed.

Other group operators, however, have already paid deposits to the TO and are now very worried.

Because on this stance, the law is straightforward: financial guarantors do not cover the funds paid between professionals in the event of one of them defaulting.

No protection for payments between professionals

Consequently, if a travel agency pays a deposit to a tour-operator that goes bankrupt in the meantime, then the money is lost.

According to our informations, no group operator member of the GIE C.E.A.G (Economic Circle of Group Agencies) should be affected.

The problem would particularly affect coach operators and agencies that handle group cases locally. Inducing possible financial consequences that many will strongly struggle to cope with.

The manager of a mini-network, who requested to remain anonymous, explains to us that one of his colleagues asked for advice on this point. She intends on making 3 small groups travel with FRAM and is wondering if it may be risky.

Uncertainty reigns and nobody wants it to persist. Because if FRAM were to file for bankruptcy, other than the disastrous social consequences this would imply, its collapse would weaken the entire industry.

And some players may not be able to withstand the shock…

FRAM: What will the consequences be on its airline commitments?

FRAM’s possible bankruptcy petition could shake up Air Méditerranée.

Indeed, the tour-operator is the airline company’s main client. For 2015, it only has two weekend departures left between now and the next two weeks.

However, the TO committed with Air Méditerranée for a major portion of its summer program, meaning 51,000 seats, departing from 11 cities of the province towards 45 destinations.

Yet Antoine Ferretti, CEO of Air Méditerranée, wants to stay confident. He is convinced that the TO will not file for bankruptcy. “If the company were to lose one of its main clients while it is still in a vulnerable situation, then things will get complicated,” believes an expert of the sector.

Yet, let’s specify that the company owes nothing to the broker Air Partner, with whom it works regularly. In fact, it is starting to plan its summer season with it, as if everything were normal.

A bankruptcy petition should have little effect on the broker or even on the TOs who co-chartered with FRAM. The only adjustments that may need to be undertaken would be to replace the planes with smaller modules.

LAC

Written by Pierre Coronas translated by Joséphine Foucher the 20/10/2015
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Tags : Fram

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