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Old 14th Apr 2020, 17:28
  #83 (permalink)  
Turb
 
Join Date: Feb 2013
Location: Gloucestershire, UK
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The whole travel industry might be forced to move away from the prepayment model where advance purchase of all kinds of travel, hotels, and package holidays is what funds day-to-day operations. From the customer's point of view an escrow model would be fairer, where the payment secures the promised service but the cash is held by a trusted (!) third party and not released to the service provider until the service has been performed. In the UK I know of one company that already operates like this - "On The Beach" (London: OTB) but it's a stand-out rarity. I know the credit card companies perform the escrow function to a limited extent in some cases, and can bring a service provider down if they judge it's unsafe to release the funds, but most firms in the travel industry rely on the prepayment money for ready cash. That seems to have been what motivated Carnival to continue despatching cruises instead of allowing customers to withdraw and get a refund.

I can't see the industry agreeing to this because it could easily double (or more) their working capital requirements but you couldn't rule out some states demanding that this is what happens.

If the prepayment model is revoked I foresee a much smaller airline industry for quite a long time, and much higher fares. Actually, I think that's the immediate future anyway.
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