Globespan's millions posted missing
The Globespan story unravels further. E-Clear, which handled its online transactions, has just had an administration order by Mr Justice Vos at the High Court in London.
That's after administrators for the Scottish travel agency and its FlyGlobespan airline, sued it to recover £35m it says was being withheld by the London company.
E-Clear failed to provide proof that it has the money by the deadline of last Friday set by the High Court. So that's another company grounded, and those waiting for their credit card payments advised to contact their issuer.
Regular readers of The Ledger won't be hugely surprised at this turn of events. E-Clear has been less than clear about its finances since it was put firmly in the frame for the collapse of Globespan on 16 December.
It said it wanted to focus on repaying customers, and it says it had begun to do so. But its efforts to find a financial backer from Germany didn't come to much. Chief executive Elias Elia had the backing of Deutsche Bank, but that link ended more than two years ago.
Through E-Clear, Mr Elia bought a controlling stake in NordFinanz, a small German bank, but regulators there denied him the ability to use that to bankroll E-Clear in London.
It's since been reported in the specialist travel media that Pago, a German firm specialising in online transactions with Deutsche Bank as its largest shareholder, was the last best hope for helping out E-Clear with funding. It's further reported that the best E-Clear could muster was an assurance that Globespan's money was not held in a dedicated trust account, but in "sub-accounts in various currencies".
That wasn't enough to satisfy the High Court today, and we'll soon find out how many other companies, travel and otherwise, are creditors of E-Clear as it withheld their millions.
It brings back the question I've asked before: how come this company could handle hundreds of millions in transactions and withhold them at will without any oversight by the Financial Services Authority? That oversight only began two months ago, and full registration and regulation won't be in place for such companies until next year.
With lots of uncertainty created there, it's also worth a look at what's happening to Scottish air travel. FlyGlobespan left a gap of, very roughly, 700,000 seats flying out of British airports, most of them from Scotland.
Industry sources reckon only a tiny proportion of those have been taken up by other airlines so far. Thomson, Thomas Cook, Jet2 and, yesterday, Kiss Flights, are picking up some of the routes, but with much lower frequency.
So far, they are all intended to take people to the sun. Significantly for Scotland's tourism industry, few of these new and revived routes are designed or likely to bring many foreigners into Scotland.
BAA, owners of Edinburgh, Glasgow and Aberdeen airports, which were the main bases for FlyGlobespan, are very keen to secure new companies to fill the gaps, but they don't have much to show for those negotiations so far. For Edinburgh, FlyGlobespan had been its sixth biggest operator, so it left a sizeable gap in BAA's financial plans as well.
With so much capacity and lots of Scots now booking their summer holidays, one result could be that they find prices are going to be much higher.
There are those that reckon prices had to go up, as they have become unsustainably low. While Ryanair continues its bombast, this feels like a crucial moment as we lurch towards the end of the low-fare era.
Comment number 1.
At 19th Jan 2010, uk_abz_scot wrote:Regarding BAA - if they are so keen on airlines to fill the gaps why don't they extend the runway at Aberdeen (they got planning permission). They have (surprise surprise!) made the car park bigger and modernised the shop.
Regarding fares - these are going up thanks to Flight Taxes (thank you Alistair & Gordon). The Tories are even worse - they want to scrap Aberdeen London (and other domestic) flights and replace them with a London Birmingham High Speed Train.
Regarding FlyGlobespan- when E-Clear started acting up - why did the FlyGlobespan directors not move to another credit processor rather than let the dubious debt escalate to a level that could threaten FlyGlobespan?
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Comment number 2.
At 19th Jan 2010, Ian_the_chopper wrote:Post 1 a couple of interesting points raised.
Firstly re Aberdeen I imagine that BAA don't want to spend any money that won't bring in an instant financial return like the car park and shop.
Also I very much doub that they will want to spend money in Aberdeen whilst there is still spare capacity in Glasgow & Edinburgh and they are unwilling on spend money on either of them when they don't know which or either they might have to sell to keep the competition commission happy.
I wouldn't be at all surprised if BAA don't look to the Scottish government for some form of subsidy or other hand out to encourage new airlines into Edinburgh or Glasgow.
As to why FlyGlobespan didn't seek another credit processor perhaps they coldn't get one or not at the terms E Clear were offering. Considering the number of low cost and budget airlines that went under in the previous 12 to 18 months I can't imagine financiers were falling over themselves to help low cost airlines.
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Comment number 3.
At 19th Jan 2010, healthytoes wrote:I would gladly pay higher prices if it meant we could have direct flights into Scotland again instead of faffing about via London/Luton or wherever.
Indeed, not good for Scottish tourism.
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Comment number 4.
At 19th Jan 2010, stouff wrote:I booked with FlyGlobespan and lost our flights, but luckily we had only paid out a deposit. We are in the process of recovering the money with the Visa chargeback scheme which is worth checking out, as I was told by both my bank and the administrators that I would lose my money. A bit of digging about on the internet and I discovered that there was a way of getting the money back, but obviously the banks don't tell you about it as it costs them and they have more paperwork to do.
I can testify to the prices going up. We tried to re-book for the same day as we have accomodation booked seperately, and Thomson and Thomas Cook have taken some of the flights. They are roughly £200 per person more expensive than we originally paid. We have since rebooked with a national carrier, but the flights are 3 stop flights and it's going to take us much longer to get there and back, but I'm just glad we didn't lose the lot.
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Comment number 5.
At 19th Jan 2010, handclapping wrote:There'll be so many people going on these more expensive holidays it will make GARL even better value than it was before.
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Comment number 6.
At 19th Jan 2010, kaybraes wrote:Elias Elia apparently had a hand in the Excel airways debacle as well. It seems though that Excel are still trading in France and Germany ( if the web site is to be believed) after going bust in Britain. Maybe there's an EU rule that lets companies go bust in Britain but continue to trade in Europe.
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Comment number 7.
At 19th Jan 2010, professor plum wrote:This comment was removed because the moderators found it broke the house rules. Explain.
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Comment number 8.
At 19th Jan 2010, travelsuperstar wrote:If E-Clear had £Millions withheld in their bank. Just how much interest does £35m+ generate on a daily basis, makes you think, doesn't?
I think the Serious Fraud Office route may be the way forward, especially when you see just how many pies Mr Elia had his fingers in and it seems his smoke screens and mirrors have now been undone.
Now with E-Clear being placed into administration. Where's the Money?...
Where's my Money to be exact? I was one of the unfortunates who booked on my debit card and who's travel Insurance (from the largest insurer in the world I should add) does not cover me for companies going in to administration.
I hope that the appointed Administrators BDO Stoy Hayward can shed light on this and both PWC and BDO can work something out for all effected.
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Comment number 9.
At 20th Jan 2010, Gary Hay wrote:#1 Like the bypass, you'll be waiting a long time for that. I was led to believe the extension was to facilitate a route directly from Texas to Aberdeen - as well as giving the Trump development something more substantial to work with in regards to getting these plump, American golf tourists over.
BAA are a nasty, greedy little bunch - but at least they don't levy an "airport development fee" like the flugsewer in Norwich.
On the subject of E Clear - it's very clear (no pun intended) that the FSA have been caught asleep on the job. Elias Eli seems to have made a career out of ruining companies for personal gain - he should have flagged up as a person of interest long before this came to the sorry conclusion it has.
I'm also interested in seeing how Scotlands air-travel infrastructure is affected by such a vaccum. I've never been a fan of budget flying but I would like to see more routes from Scottish cities to Europe and beyond. In the advent that the Scottish economy is given free reign to pursue it's aspirations, it's something that needs to be invested in now.
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Comment number 10.
At 20th Jan 2010, stouff wrote:Travelsuperstar, was it a Visa debit card you used? We used a Visa Electron card to get round the booking fees and when the airline went under I thought we had lost our money. Our travel insurance wouldn't cover us either. Upon phoning the bank, we were told that there was nothing they could do, as it was an electron card we had less protection than debit or credit card customers.
I did a bit of digging around on the internet and discovered that if you have paid on a Visa card of any type, you can claim though the Visa chargeback scheme. Basically if you can prove that you have paid for goods not supplied, you can instruct your bank to 'chargeback' the amount to the suppliers bank. This includes instances when a company has gone bust. In ceasing trading, they are breaking their contract with you, and therefore, if you can provide your reciept and travel itinerary, you can claim the full amount back.
The banks obviously don't want anyone to know about it as it costs them money, but you get 120 days to claim (from the date your goods were meant to arrive - in this case from the day that the flight was scheduled to leave). They will require you to get a letter from ABTA or ATOL saying that you're unable to be re-imbursed by them, and they should take it from there.
We're still in the process of claiming, but if you give it a try, you may get your money back. There are loads of examples of people using this service to get money back from Zoom and Excel, so don't despair just yet!
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Comment number 11.
At 20th Jan 2010, uk_abz_scot wrote:#6 Kaybraes The same thing happens within the UK. Think of ITV Digital which went under and ITV still trading.
#9 Gary - I think the Texas thing was always way over-optimistic but a longer runway might tempt more low cost flights and maybe even cargo as the short runway limits take off weights. (e.g some holiday flights from ABZ have to land at Shannon to take on more fuel). All BAA seem to be interested in are oil industry executives. Compare Ryanair fares from EDI to Scandinavia to the posh expensive airline fares from ABZ to Scandinavia.
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Comment number 12.
At 20th Jan 2010, Gary Hay wrote:#11 uk_abz_scot
I agree, longer runway would be better all round for the local denizens - I couldn't care less whether Texas becomes a reality or not. I fly on business regularly from Aberdeen and trust me, I know the fares arn't cheap for someone not flying on a company ticket. I would never fly to Bergen or Stavanger from Aberdeen with Wideroe or SAS, just the same as I'd avoid flying to Norwich or even Liverpool with Eastern.
They are all geared to make money out of the oil industry and screw the public when they come to spend thier cash on a hard earned break abroad.
I toyed with the idea of leaving aberdeen airport (and worlds largest commercial heliport - lets not forget) the way it is and getting all of Scotlands local authorities to chip in together and build a HUGE airport hub in central scotland, with decent rail and road links to all the major cities. Edzell would have been my personal choice, seeing as it's disused, central(ish) and the runways are only used by kids racing thier cars on weekends!
But as always, the powers that be are shortsighted. No-one seems to realise that air traffic isn't going to disappear overnight and in 20 years time, if we're not ahead of the curve, we'll be playing catch-up, like always.
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Comment number 13.
At 25th Jan 2010, travelsuperstar wrote:I noticed that E-Clears website is still up and running and is still making promises it can't deliver (Although all phone-lines appear to be cut off):
www.eclear.com
There's a section about "Risk Management" which I couldn't help but snigger at given that outcome of investigations so far.
"Risk Management
E-Clear's IT experts will work with people from your own company to identify and define risk management"
They clearly didn't switch it on, did they?
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