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The XL effect - 16 September 2008

Although the story has now been somewhat lost the continued woes of the finance industry, the collapse of the third-largest tour operator in the country would be the biggest story of the month at any other time. The XL group catastrophically went into receivership last Friday morning, leaving not only 67,000 people stranded overseas without an airline to get them back home, but hundreds of thousands of others facing the prospect of losing the money they had paid out for holidays they have been looking forward to for months.

While the effects on the travel industry and those holidaymakers left without their bookings have been profound, there is also a knock-on effect for the world of overseas property. Many owners use airlines like XL to get to their properties overseas, and the sudden loss of the easiest route between the UK and your base abroad can leave you wondering what to do for the future.

For the most part, the collapse of XL has removed an option for those who travelled regularly on the routes served by the airline. XL concentrated mostly on leisure routes on the short-haul European schedule, and recently moved into serving North Africa, Egypt and the Caribbean. However, the airline had few exclusive routes across its network, so people who use their routes should have another option to get out to their destination.

What the collapse of the airline does do is highlight the need for buyers of overseas property to consider the options for traveling to their destination very carefully before they buy. This is especially important in emerging markets – it might sound perfect to buy in the middle of a brand new country served by the local airport, but if only one airline flies the route, you could be left high and dry if the route is cancelled.

Low cost airlines are run on extremely tight margins, and should any route become unprofitable, they will not hesitate to drop it from schedules, no matter how many people might be depending on it to get to their holiday homes. The best way to make sure you are not left without a realistic way to get to your property overseas is to check that more than one airline is running the route for at least part of the year. Not only does this provide you with an alternative should one airline pull out, it should make travelling to your overseas destination cheaper as the airlines will compete for the business on the route.

Many people are now considering buying closer to the UK to expand their travel options. As the price of air travel is set to rise yet further, and as people become more concerned about their personal carbon footprint, some buyers are beginning to look at more environmentally-friendly ways of making regular long journeys. Those buying in mainland Europe have the option to make their way to their property by one of the high-speed rail services that run from the Eurostar terminals in London or Paris. For example, it is now possible to reach the ski areas of the Alps or even Avignon directly from London by Eurostar. When you take into account the time spent travelling to airports and waiting in lounges, it doesn’t take much longer than travelling by air.

As for the routes XL have now left empty, other aitrlines may come in to increase their own capacity. While no-one in the travel sector is looking like expanding in the current climate, the slots at some of the most popular tourist destination airports are too valuable for other airlines to ignore.

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