I think some balance needs to be applied in relation to the recent failure of XL and the near hysterical utterances from the larger agents and consortia over the last two months.
It was no secret that XL had been in financial difficulty for many months before its demise. Why then did these organisations not apply stricter credit control in relation to their exposure to XL rather than blaming the CAA for everything? Why did they not put them on “stop sale” sooner? The cynic in me believes their constant bleating is a way of diverting attention from their own failure to manage their risk properly. Larger buying groups are never slow in coming forward to protect themselves by paying suppliers after departure – why not in the case of XL? I have asked many companies who lost money on XL, some who had been repeatedly warned by me of their precarious financial position, why they continued to buy supply from them and prepay them despite their widely known difficulties. The sheepish reply has always been “We bought on price”! If you live by the sword……..!
Too many have forgotten the XL good points and good times. XL at one stage was a successful and thriving entity that in a very short space of time made it to number 3 in the travel company charts. Many companies made very substantial profits selling XL flights as part of their “dynamic packages” for a number of years and since the demise are bemoaning the lack of aviation capacity to their most profitable destinations. There is a gap in the market that will be filled by the new start up aviation and airline entities that have been highlighted in the travel press in recent weeks. While some have summised they will be the XL of tomorrow nevertheless I believe they will still buy from them. Hopefully this time they will manage their financial risk better!!!
In 1991 the travel industry was shaken to the core by the failure of ILG, the last major failure prior to XL. Many column inches were written about that failure, management criticised and consumers inconvenienced and yet what has risen from the ashes of ILG? Despite the failure its figurehead, Harry Goodman, is revered as an industry innovator and is an Industry Hall of Famer! Peter Long and Manny Fontenla-Novoa, respective CEOs of Tui and Thomas Cook, are both ex-ILG executives. Fontenla-Novoa said, when receiving a special achievement award for his work at the Travel Industry Hall of Fame, that he “……..owed everything to Harry Goodman”!
It has frequently been said by better judges than I that an entrepreneur needs to experience at first hand a failure in order to become a success. Individual former executives and managers of XL will rise again and will have learned hard lessons from their experience. Will they succeed in the future? Only time will tell but the ILG experience dictates that they just might!
