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Are we nearing the end of cheap air travel?

Over the last 20 years we have seen a massive increase in air travel in the UK, after the creation and the massive growth seen in the budget airline industry. While the budget airline industry is not a recent phenomenon, there is no doubt that growth seen over the last 20 years in the UK has been amazing to say the least - and often encouraged by the UK authorities. So is this the end of cheap air travel?

What has become clear over the last two years is the fact that many travel companies in the UK work on wafer thin margins and cash flow has become a major issue in recent times. As we saw with the collapse of Flyglobespan, and unsubstantiated allegations that the company was owed £35 million by its credit card processing company, the timing of fund receipts can impact upon any business and its financial status.

There is no doubt that banks will now require more and more collateral when looking to lend money to travel companies, and particularly airline companies, which will obviously impact upon profitability. As a consequence, it looks as though the years of extremely cheap air travel in the UK may well be coming to an end.

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