Second UK holiday firm K&S Travel follows XL into collapse

London-based holiday firm K&S Travel, specialising in trips to Turkey, has become the second casualty after travel firm XL Leisure Group collapsed and left 85,000 people stranded across the world.

The collapse of K&S Travel affects around 550 people already on holiday or due to depart shortly. Most of those already abroad are in the Turkish resort of Bodrum. Reports indicate that around 150 passengers were stranded in Bodrum, Turkey, while another 460 who had booked holidays will no longer be able to avail of them.

The Civil Aviation Authority said it would be chartering an aircraft to fly them back home.

Meanwhile, XL Leisure Group, the UK's third largest tour operator, went into administration with debts of £143 million. The firm grounded its 21st aircraft on Friday, and stranded a total of 85,000 tourists in the United States, Europe, North Africa and the Caribbean. Another 200,000 future holidays were written off.

It is estimated that around 30,000 people would not receive a refund through the industry's Air Travel Organisers' Licence (ATOL) protection scheme, which covers the cost of return flights and additional accommodation for travellers who booked through ATOL-registered agents.

However, people who booked through XL's website and call centres, choosing to pay through debit cards do not have any such recourse, and could lost a total of up to £20 million.

Louise Ellman, the Labour chairman of the Commons transport select committee has called on the government to extend the protection scheme, in the light of what has happened.

It has now come to light that XL's auditors KPMG had raised a red flag about 'financial irregularities' around two years ago, and have claimed that it was blocked from undertaking a comprehensive investigation into the company. KPMG had said that information had been misrepresented by certain company directors, and it was possible that there were "material errors" in the firm's financial statements.

A KPMG document from October 2006 filed at Companies House clearly stated, "We are no longer able to conclude that the financial statements give a true and fair view of the profit of the company and its subsidiaries."

The Civil Aviation Authority arranged for 94 flights to bring back passengers stranded across 28 airports in Europe and America. Another 50,000 are expected return to the UK when their holidays end. Around 10,000 who booked flights only will have to make their own way back.

Since XL collapsed, around 22,000 people have been brought back to the UK on over 50 flights in a rescue airlift by the Civil Aviation Authority, which has been forced to charter planes from companies including British Airways, Virgin Atlantic and Monarch, besides fill spare seats on scheduled flights.

K&S Travel, which also trades under the name Travel Turkey, advised flight regulators on Saturday night that it was to cease trading. K&S Travel organised package tours to Turkey on flights chartered from Onur Air.