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David Speakman – comments on financial protection in the Australian Travel Industry

May 1, 2014 Mobile travel consulting No Comments Email Email

With the 1 July disbanding of the Travel Compensation Fund and industry deregulation approaching, the recent debates between agency owners about the credibility of the new AFTA Travel Accreditation Scheme (ATAS) and financial protection in the industry is, to say the least, getting farcical.

These debates within the trade press have highlighted that the industry is certainly not convinced that the dissolution of the Travel Compensation Fund will be replaced by an adequate self-regulatory scheme.  And if the industry is unsure, then what are customers supposed to think?

AFTA Chief Jayson Westbury has made a noble attempt to implement a ‘travel agent insolvency insurance scheme’. However it is the failure to make it mandatory that has become the debate.  Barry Mayo, Travel Managers Chairman, believes (as I do) that the scheme should be mandatory, though there are legal issues as to why AFTA can’t deliver that. Roy Merricks, MTA boss, calls ATAS doubters “backward” and believes the flawed plan of non-mandatory insolvency insurance should be given a chance, claiming it gave “sufficient” financial protection. I presume sufficient being enough in a limited travel agency way.

But they all miss the point.  Travel agents no longer have the exclusive right to sell travel, with the ubiquitous internet allowing customers to now book themselves.  What travel agents now sell is validation, care, trust and their expertise, so financial protection is an essential part of building that trust.  How can any travel business take money from the customer in advance and not ensure 100% that all the money will be safeguarded in the event of any failure, not just agency failure. The Australian debate centres on the insolvency of the agent and the effect that might have on the customer, rather than the complete financial core protection of all monies. It is absurd that when the ship is sinking the agency fraternity is arguing about who should, and who should not, have a particular deckchair.

I wrote about this issue late last year, when Travel Counsellors implemented a full financial protection promise into our business in Australia, as we felt that a clear promise was needed then, rather than a vague mumble about a fix in the future.

Last week Barry Mayo, in response to yet more agency insolvencies, took up the debate again (tellingly, without any interim financial promise to his customers) and made the outrageous claim that “whilst there is no legal requirement for travel agents to offer financial protection for their customers in Britain, ABTA insists on it being a condition for ABTA membership”. Now I am sure ABTA would wallow in the name check and relish another travel source continuing their myth of customer financial protection. However not only is Barry’s claim factually incorrect, but the irony is that Barry has been hoisted by the very problem petard that he claims the AFTA scheme will also cause. In 2006 ABTA decided to no longer compensate customers if their agent members became insolvent, and now have vague, convoluted non-promise of customer financial protection which confuses not only their customers but also their own agent members and the consumer press. Obviously Barry still lives in the yesteryear of ABTA being a proud leader in financial protection – a mantle that we now believe Travel Counsellors holds in the UK travel industry, offering complete and unconditional financial protection for customers.

In the UK, Travel Counsellors has created a trust in which all customer money is protected for the customer pre-travel and for the supplier post-travel. This model is now being replicated and implemented by the Civil Aviation Authority in the UK.  So from 1 July, Travel Counsellors customers in Australia will continue to have their money 100% protected in the eventuality of any failure.  Travel Counsellors will be leading the way for financial protection in Australia, giving our customers complete peace of mind when booking their travel with our Travel Counsellors. I encourage others within the industry to follow suit.

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