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Failed airline 'badly let down' Failed airline 'badly let down'
(about 2 hours later)
Finance Secretary John Swinney has said that collapsed Scottish airline Flyglobespan was "badly let down" by a company handling its credit bookings.Finance Secretary John Swinney has said that collapsed Scottish airline Flyglobespan was "badly let down" by a company handling its credit bookings.
The Edinburgh-based airline went into administration on Wednesday, leaving 550 staff without a job and thousands of passengers stranded abroad.The Edinburgh-based airline went into administration on Wednesday, leaving 550 staff without a job and thousands of passengers stranded abroad.
Mr Swinney said Flyglobespan was owed £34m by E-Clear, the company which processed its credit card payments.Mr Swinney said Flyglobespan was owed £34m by E-Clear, the company which processed its credit card payments.
He said £20m of this was for passengers who had already flown.He said £20m of this was for passengers who had already flown.
The finance secretary said it was "beyond dispute" the money should have been in Flyglobespan's bank account.The finance secretary said it was "beyond dispute" the money should have been in Flyglobespan's bank account.
He added the company would have had "a better chance of survival" if the money had been passed on.He added the company would have had "a better chance of survival" if the money had been passed on.
The finance secretary said: "This company has been badly let down by the fact that a private company, handling bookings on their behalf, has not paid them money that they were due. That is the inescapable commercial reality of what has been faced here."The finance secretary said: "This company has been badly let down by the fact that a private company, handling bookings on their behalf, has not paid them money that they were due. That is the inescapable commercial reality of what has been faced here."
Mr Swinney added: "The key issue is about making sure that, in the private market, companies honour their commitments.Mr Swinney added: "The key issue is about making sure that, in the private market, companies honour their commitments.
"Here E-Clear have held on to money that should have been passed on the Flyglobespan and as a consequence employees of Flyglobespan and members of the travelling public are now experiencing real difficulties.""Here E-Clear have held on to money that should have been passed on the Flyglobespan and as a consequence employees of Flyglobespan and members of the travelling public are now experiencing real difficulties."
Douglas FraserBBC Scotland business editor Here's an explanation. When you pay by credit card, that transaction should insure your ticket against collapse of the airline.Douglas FraserBBC Scotland business editor Here's an explanation. When you pay by credit card, that transaction should insure your ticket against collapse of the airline.
After XL and Zoom went down last year, the insurance industry made it much more expensive for credit card companies to cover that insurance cost.After XL and Zoom went down last year, the insurance industry made it much more expensive for credit card companies to cover that insurance cost.
One solution is for the companies to hold on to the cash until the flights have taken place. Once they've landed, obviously, there won't be a claim on that flight's tickets.One solution is for the companies to hold on to the cash until the flights have taken place. Once they've landed, obviously, there won't be a claim on that flight's tickets.
This doesn't operate for all airlines, but since last year, delays in payment became more common as a means of insuring tickets.This doesn't operate for all airlines, but since last year, delays in payment became more common as a means of insuring tickets.
So that might explain why E-Clear, the company which we're told was handling Flyglobespan's online transactions, was hanging on to £14m of cash for tickets that had yet to be used.So that might explain why E-Clear, the company which we're told was handling Flyglobespan's online transactions, was hanging on to £14m of cash for tickets that had yet to be used.
It doesn't explain why it was withholding as much as £20m for tickets that had been used - transactions which no longer carried any risk. Douglas Fraser's blogIt doesn't explain why it was withholding as much as £20m for tickets that had been used - transactions which no longer carried any risk. Douglas Fraser's blog
Mr Swinney said Holyrood Transport Minister Stewart Stevenson had met Flyglobespan bosses in September, adding that the company had said then that "they had the expectation that they would need to borrow some more money to sustain some of their activities".Mr Swinney said Holyrood Transport Minister Stewart Stevenson had met Flyglobespan bosses in September, adding that the company had said then that "they had the expectation that they would need to borrow some more money to sustain some of their activities".
A statement from the directors of E-Clear offered "deepest sympathy for the customers and staff of Flyglobespan".
It said: "E-Clear is committed to working closely with the administrators of The Globespan Group to clarify and address the various complexities around the airline's financial position, so that matters may be resolved as quickly as possible."
E-Clear's chief executive officer Elias Elia said: "As one of the world's leading payment card processing companies, we have many years' experience in the airline industry and we will bring this expertise to bear in pursuit of an equable solution that reflects the interests of all parties."
Administrators PricewaterhouseCoopers (PWC) said on Thursday there was no choice other than to cease flights and make redundancies.Administrators PricewaterhouseCoopers (PWC) said on Thursday there was no choice other than to cease flights and make redundancies.
Out of the 650 workers at the Edinburgh-based firm, 550 are now without a job.Out of the 650 workers at the Edinburgh-based firm, 550 are now without a job.
Bruce Cartwright from the administrators said everything was being done to ensure that 4,500 stranded holidaymakers would be brought home.Bruce Cartwright from the administrators said everything was being done to ensure that 4,500 stranded holidaymakers would be brought home.
He said the remaining 27 of 60 crew left stranded abroad would return home on Friday.He said the remaining 27 of 60 crew left stranded abroad would return home on Friday.
They, along with Flyglobespan customers, have been using extra flights and special fares laid on by rival airlines.They, along with Flyglobespan customers, have been using extra flights and special fares laid on by rival airlines.
Unite said the collapse was a "tragedy" for travellers and for staff who face a Christmas without pay.Unite said the collapse was a "tragedy" for travellers and for staff who face a Christmas without pay.
Brian Boyd, the union's national officer for civil aviation, said: "Along with thousands of passengers stuck overseas, the Flyglobespan employees have been thrown into a Christmas of misery with no wages and no job."Brian Boyd, the union's national officer for civil aviation, said: "Along with thousands of passengers stuck overseas, the Flyglobespan employees have been thrown into a Christmas of misery with no wages and no job."
Flyglobespan operated flights from Edinburgh, Glasgow and Aberdeen as well as transatlantic services from other UK airports including Manchester, Gatwick and Belfast.Flyglobespan operated flights from Edinburgh, Glasgow and Aberdeen as well as transatlantic services from other UK airports including Manchester, Gatwick and Belfast.
An estimated 3,400 holidaymakers were left stranded in Spain, Portugal, Cyprus and Egypt.An estimated 3,400 holidaymakers were left stranded in Spain, Portugal, Cyprus and Egypt.
About 1,100 customers of Globespan package holidays were also left abroad, but they are covered by the Civil Aviation Authority-run Air Travel Organisers' Licensing (Atol) scheme which guarantees refunds and return flights.About 1,100 customers of Globespan package holidays were also left abroad, but they are covered by the Civil Aviation Authority-run Air Travel Organisers' Licensing (Atol) scheme which guarantees refunds and return flights.
Passengers can either call on 0131 466 7612 or on 0141 332 3233.Passengers can either call on 0131 466 7612 or on 0141 332 3233.


Are you scheduled to fly with Flyglobespan? Are you stranded abroad? Do you work for them? Send us your comments using the form below.Are you scheduled to fly with Flyglobespan? Are you stranded abroad? Do you work for them? Send us your comments using the form below.
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