Pay Now, Fly Never

Businesses fail every day, but seldom with so reverberating a crash as the one that has just accompanied the collapse of Court Line, Britain's second largest travel firm. Some 49,000 British tourists, mostly members of the working class, were stranded throughout Europe, the Soviet Union and North Africa. Another 100,000 had to stay home; they lost not only their holidays but perhaps $15 million which had been prepaid, often with life savings. "We've slaved, actually slaved, for a whole year, cutting down on everything from milk to the pictures," sobbed one London schoolteacher. "Now we've lost the holiday and the money. Oh God, what can we do?"

Rumors that other large businesses will go under started a dive in the already depressed London stock market; the Financial Times index plummeted below 200 for the first time since 1958. Adjusted for inflation, British stock prices are at their lowest since 1940.

Tory newspapers bitterly attacked Harold Wilson's Labor government. In June, the government agreed to buy Court Line's shipbuilding interests for $37 million, and Anthony Wedgwood Benn, Secretary of State for Industry, assured Britons that the money should provide "reasonable security" to Court Line's other operations, "including the holidays booked for this summer." Believing him, many more would-be travelers signed up and paid for trips right through the night before Court Line closed its doors. The Conservative Party could hardly have composed a more spirited overture for the national election expected to be held in October.

The collapse came as no surprise to financial experts. The British travel industry has been plagued by undersecured operators, perilously narrow profit margins and cutthroat price competition. In the past five years, 44 firms have folded and many others are in trouble. Last week the collapse of the Tabberer Agency in Birmingham left 800 Britons stranded in Canada and the U.S.

Court Line, originally a shipping and shipbuilding concern, expanded into travel in the mid-'60s and built up its own twelve-plane airline; within the past year it unwisely bought two financially shaky travel firms. The company pursued sheer volume, booking tours so cheaply that they often yielded only $1.25 profit per traveler. When rising airline fares-and economic stagnation caused many Britons to cut back on their vacation plans, costs overtook prices and failure became inevitable, despite the government's rescue attempt.

Last week the government, using an $8.7 million bond that Court Line had posted, pushed a major effort--dubbed Operation Sunburn by some jokesters --to bring Court Line's stranded tourists home. And over Tory jeers that the Court Line affair proved Labor's ineptitude in dealing with industry, the government unfurled further nationalization plans: to take control of all British ports and their ancillary operations and to nationalize the country's two largest aircraft makers, British Aircraft and Hawker Siddeley. So far, though, no plans have been announced to nationalize the tourist industry.

* The International Air Transport Association voted last week to boost fares on the North Atlantic an average 10% on Nov. 1, on top of three increases totaling 18% earlier this year.

This file is automatically generated by a robot program, so viewer discretion is required.