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ATAS elephant in the room may end up falling on agents

April 1, 2014 Corporate, Headline News 2 Comments Email Email

egtmedia59In just three months from today, travel agents will no longer have to participate in the Travel Compensation Fund (TCF). Disturbing questions continue to be asked about what will happen if Australian travel firms go bust, owing clients large amounts of money, when the TCF has gone.

Such a scenario has the potential to cause devastatingly bad publicity for travel agents – yet much of the travel industry seems curiously reluctant to discuss it. The looming topic has become “the elephant in the room”.

Claims on the TCF continue to be made. So far this year, the TCF has named Travelwiz in Sydney and Tribal Travel (with five outlets) as having their TCF membership revoked due to receipt of consumer claims. The last travel company to be deregistered in this manner was in February.

Barry Mayo - Chairman TravelManagers Australia

Barry Mayo – Chairman TravelManagers Australia

When claims are made, the TCF quietly pays out, defusing a lot of bad publicity that might otherwise hit the fan and damage the reputations of the travel agent community generally.

Once the TCF disappears in three months, on 30 June 2014, all eyes will be on what happens next. While the TCF is compulsory, the scheme that will replace it, the Australian Travel Accreditation Scheme (ATAS), administered by the Australian Federation of Travel Agents (AFTA), is voluntary.

That’s a big difference.

TravelManagers is one travel company that continues to have serious misgivings about  ATAS.

TravelManagers’ Chairman, Barry Mayo, points out that the customers of the six travel agent outlets who have submitted claims to the TCF recently would not be able to do so under ATAS, as it is currently proposed.

Mayo feels that state and territory ministers responsible for consumer affairs simply do not recognise the potential size of the issue in terms of consumer dollars or disrupted travel.

Mayo points out that according to the TCF’s most recently published annual report, “there were in 2012, 15 travel agent collapses, 1299 claims paid out totalling $4,185,035 – and not one claimant had need to resort to the media to have their claim settled”.

TravelManagers has been extremely vocal about the inadequacies of ATAS, in particular over consumer protection being voluntary, as highlighted directly in meetings with AFTA and publicly through trade publications.

TravelManagers, while having reservations about ATAS, strongly contends that all future ATAS members should be required to have Travel Intermediary Insolvency Insurance, to offer consumer protection similar to that currently provided by the TCF through its financial oversight of travel agents.

“TravelManagers view this as the most important issue facing the travel agency community and its supplier partners in 2014. The recent publication as part of a list of terminated agents on the TCF website of travel agents, identifying Travelwiz in Sydney and Tribal The Elephant in the Room. Artwork by BanksyTravel with five outlets in four States, as having their TCF membership revoked due to receipt of consumer claims as recently as February, highlights the real concerns for customer protection,” Mayo said yesterday.

“As from 1 July, without mandatory Travel Intermediary Insolvency Insurance, the potential for a significant number of clients to be adversely affected increases dramatically. What would be the end result? A number of clients being severely out of pocket with the likelihood they would be unable to commence their travel.”

Mayo does not want to see a weakening in consumer protection, which could result  in negative consumer media exposure of the travel agency industry. Out-of-pocket clients would potentially seek recourse via the media in the event of a travel agency collapse, upon finding their funds were not covered by any Travel Intermediary Insolvency Insurance.

High-profile consumer advocates such as CHOICE, the Australian Consumers Association, would also become involved. CHOICE has already warned consumers of the likely outcome when the TCF disappears, saying the TCF abolition will “leave many Australians high and dry when travel agents go bust”. The media will have a field day if those predictions are fulfilled.

“Should ATAS adopt mandatory Travel Intermediary Insolvency Insurance, this has the benefit of giving consumers surety and clarity that their funds are protected if using an ATAS accredited travel agent, whilst in the hands of that agent,” Mayo said.

“More importantly, it will ensure the consumer maintains a similar level of financial protection and is not disadvantaged by the transition from licensing and TCF to ATAS and therefore not materially worse off than they are currently.

“It’s TravelManagers’ view that the consumer should not be adversely impacted by the governments’ endorsement of ATAS, which will not be the case if AFTA proceeds with ATAS as currently proposed,” Mayo said.

With state and territory licensing of travel agents ceasing to exist from 30 June 2014, TravelManagers hopes that by speaking out, more “visible” support will be forthcoming from other companies in the travel industry “now that real examples of the scheme’s shortcomings are proving to be a reality”.

“We urge the travel agency community to be actively discussing the pros and cons of ATAS with the management of their agency group and with AFTA itself. The time remaining for any refinement to the scheme is now less than three months and travel agents have still not been provided with details of premiums and conditions for Travel Intermediary Insolvency Insurance.

“Consumer confidence in retail travel distribution is critical and without it your business and the perception of the travel agent industry could change forever,” Mayo said.

Written by : Peter Needham

Currently there are "2 comments" on this Article:

  1. AgentGerko says:

    ATAS has been a disaster from the word go. Its just replacing a system which was working fine, and at minimal cost, with another that will cost considerably more and be less effective. My agency, for one, has no intention of participating. Even if we did participate our clients would only be covered for the businesses we nominate, and if a non-nominated wholesaler or airline were to fail they would not be covered. When you book clients on dozens of small and obscure airlines each year, how can you nominate them all? And if we did, the premiums would be astronomical. Its just another example of AFTA sticking its big, multi-controlled boot into something. Here’s an idea. Restore the TCF and scrap AFTA.

  2. AGENTOGNAT says:

    Scrapping TCF is a mistake, the potential fallout on retail agents a disaster – agreed.
    But with only 3 months to go the ship of state will not be turned around.
    There will be failures and consumer losses but they should be used to highlight the need to book with AFTA member agents.
    We have to go with AFTA and ATAS – and they have to make a lot of noise about the benefits to drive customers to us.

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