Chapter 32
The Airtours Flight-Only Fraud: Brown Envelopes and Blind Trust
Trust needs proper supervision, particularly when someone can directly change what customers pay.
Throughout my 40 years in travel, I have seen businesses quietly sweep fraud under the carpet because admitting what happened would raise embarrassing questions about how their IT systems and management structures ever allowed it. The temptation is to remove the problem and avoid the publicity, but I have always wondered how often that simply allows the people involved to try their luck somewhere else.
1995
In 1995, while I was Sales and Commercial Director at Airtours, I experienced exactly how a trusted employee could exploit weak systems and insufficient supervision. The police were never called, and the individual was never taken to court, so I will not identify him or the third-party businesses involved, but those who were there will know who I am talking about and, in my view, they should still consider themselves extremely lucky not to have gone to jail for fraud.
As I moved up the management ladder, I wanted to give my deputy, Seamus, more support while investing in areas where additional focus could improve profitability. Flight-only was an obvious candidate because, for years, I had largely treated it as a product that demanded my attention once a year when we priced the brochure.
Its customers were different from our core package holiday families: often older couples with holiday homes in Spain or Portugal, or people visiting friends and relatives who needed a flight but had no use for our accommodation. Average margins were around £35 compared with £55 on a package, but selling spare seats early reduced the volume we would otherwise have to shift in the late market, often at painfully low prices.
Specialist flight-only retailers had sprung up to serve this demand, advertising heavily in newspapers and on Teletext, with others working alongside timeshare businesses. We recruited an experienced sector specialist, gave him a small team and allowed him to negotiate commercial deals with these retailers. It seemed a sensible way to grow a neglected part of the business, and he soon became a trusted member of Seamus’s team.
With hindsight, the supervision was far too light, and I cannot pretend that responsibility belonged entirely to somebody else.
Around two years into his employment, Airtours’ infamous Internal Audit team approached me with rumours about “large brown envelopes” being received by members of the commercial department. I was initially sceptical and absolutely convinced Seamus was not involved, which quickly proved true. However, being confident in your deputy is no reason to block an investigation, so I asked for clear evidence, then went to discuss the accusation with Seamus and his senior team.
Sometimes someone’s reaction tells you more than their words. Watching one team member visibly pale and nervously glance towards the exit immediately told me he was guilty as hell, a view Seamus shared as soon as everyone left the room. Internal Audit subsequently provided photographs of the individual sitting in his car outside a major Manchester flight-only retailer, counting a substantial sum of cash from a very cliched brown paper bag.
The mechanism, once we uncovered it, was embarrassingly simple. The flight-only manager had the system authority to amend flight prices because it was part of his daily job, but he didn't have the authority to sit late at night at his desk and discount bookings for participating retailers by £20 per booking. Those retailers received cheaper seats, he received cash, and Airtours funded the arrangement by surrendering millions in revenue it should never have.
Nobody had thought to implement an effective audit trail that would flag this abuse. We had given someone the commercial freedom to agree deals and the system access to alter prices, without adequate checks on how those powers were used.
What shocked me most was the scale of retailer involvement. I had naively assumed we were dealing with one employee and the large Manchester business whose car park featured in the photographs. Once we wrote the code needed to investigate the changes, we discovered regular discounts had also been handed to seven other flight-only retailers.
It is easy to describe something like this as the work of one dishonest employee, because that is a much more comfortable explanation than admitting how many people benefited or how easily the system allowed it to happen.
For me, the lasting lesson was that trust needs proper supervision, particularly when someone can directly change what customers pay. Giving talented people freedom makes commercial sense, but checking how they use it is part of the management job.
We should have built those checks before the brown envelopes started changing hands, rather than after somebody was photographed counting the contents.
