Largest Youth Travel Agency Files in Bankruptcy Court

The student travel industry has been in turmoil in the last few weeks after New York-based Council Travel, the largest student travel agency in the U.S., filed for Chapter 11 reorganization Feb. 5.

Although some airlines initially refused to accept tickets issued by Council Travel or required passengers to fly standby, they later agreed to honor the tickets, said Michael Burns, vice president of marketing for the agency in New York. “Our vendors have been very supportive,” he said. “We’re still open and operating.”

Continental Airlines said it was accepting Council Travel tickets on a confirmed basis but declined further comment. In filings, it alleged it had failed to receive payment for 2,800 tickets.

Council Travel has 76 offices in the U.S. and offers negotiated low fares on more than 40 airlines flying to more than 400 destinations. It was long owned by the nonprofit New York-based Council on International Educational Exchange, or CIEE, but was sold to Ireland-based USIT World just before the Sept. 11 attacks.

USIT World, which runs a worldwide network of student travel agencies, filed for “the Irish equivalent of Chapter 11” in late January, and Council Travel soon followed, seeking bankruptcy protection in U.S. Bankruptcy Court, Southern District of New York, Burns said. The parent company was struggling under millions of dollars in debt, according to the Times of London newspaper; its British subsidiary shut its doors, the newspaper added.

USIT’s major rival, Swiss-owned STA Travel, is interested in acquiring some of the assets of Council Travel and has put in a bid to do so with the court, said Nicholas Thomas, Los Angeles-based president of STA Travel North America. STA runs 57 offices in the U.S. and close to 400 worldwide.