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Three good questions after spate of agency collapses

August 10, 2015 Corporate, Headline News 4 Comments Email Email

egtmedia59A spate of unconnected travel agency collapses in various parts of Australia with loss of consumer funds, some involving agents absconding, has prompted some crucial questions.

Speaking after news emerged of an arrest and charges in relation to the sudden closure of South Australia’s Zym Travel (see: Police arrest travel agency owner as probe continues), TravelManagers’ chairman Barry Mayo pointed out that the arrest would do nothing to help Zym Travel’s many customers. Their money had gone and their travel plans had been disrupted.

“Nor does it do anything to uphold travel agency industry integrity,” Mayo commented.

“TravelManagers feels extremely strongly about the issues of consumer protection or defending the integrity of the travel agency community and continues to question government, including the South Australian Government, around the indisputable inadequacies of the deregulated model that has been established in place of the disbanded state licensing and national consumer protection scheme.

“With the disestablishment of the Travel Compensation Fund (TCF) there have been six travel agency collapses (since 14 May 2015) with consumer losses to date.”

Mayo, who supports the return of the TCF, said TravelManagers did not see the situation for consumer protection or upholding travel agency integrity improving without continued discussion and questioning.

TravelManagers has put forward three points that it would like to see debated within the wider travel industry:

  • “Industry regulation and consumer protection will be upheld through the Australian Consumer Law (ACL) and voluntary initiatives.”

How will the ACL assist customers of Zym Travel and the customers of the previous five travel agency collapses since 14 May 2015 to have their tickets reinstated or their lost money recovered when it is likely the principals of the defaulting agents will have no assets?

  • “The ACL provides appropriate protection for consumers.”

Can any Government Minister responsible for consumer affairs demonstrate how the ACL has provided protection for the customers of Zym Travel and the previous five travel agency insolvencies since 14 May?

  • “The Australian Federation Travel Agents (AFTA) has developed a voluntary accreditation scheme (ATAS) for the industry which will help consumers identify reputable businesses.”

Can any Government representative comprehensively demonstrate in detail exactly what has been done to help consumers identify reputable businesses?

Mayo contends that ATAS in its current form does not meet the needs of the consumer nor the travel agency community and unless there is a more robust approach to the security of consumer funds, “the outlook for both for consumers and industry is extremely dire”.

“The question now – how many more consumers will be adversely affected before action is taken?

“It is critical that industry and government actively confront this extremely important industry and consumer issue.”

Written by Peter Needham

Currently there are "4 comments" on this Article:

  1. sting says:

    …barry mayo had spoken the gospel truth when he prophesied circumstances when agents collapse without the tcf… the new voluntary scheme is not all about protecting the public… it works for big travel business like flight centre which can use agents fiascos to its advantage at the travelling public expense … in the middle of all these agent collapses one comment even said – if you want your money safe book with flight centre… i wouldn’t be surprised if it came from the office of mr turner… one of the most influential person in the industry had no qualms about the atas going ahead… and why wouldn’t he… you get the idea…

  2. AgentGerko says:

    Three good questions, Barry. One point, though. Q3 indicates that somehow ATAS will identify reputable agencies, and this tends to indicate that, at the very least, a non-ATAS agency may not be reputable. Considering that at least two of the closed agencies were ATAS accredited, and as owner of an IATA/CLIA accredited agency that has operated successfully for 28 years and which has no intention of becoming ATAS accredited, I believe the point should be made clear that accreditation of ATAS really has little to do with the viability or ethics of a particular travel agency. Only research by the consumer can possibly direct them towards reputable agencies, which is very sad, as under the TCF this was not a requirement.

  3. Nicky says:

    I agree entirely with Barry Mayo’s comments. Really poor handling of a system that may not have been perfect but that protected clients in the case of unscrupulous agents. I for one, still follow the rules of TCF by keeping all client funds in a client account until dispersed to suppliers.

    Without proper licencing anyone can “follow their dream” of being a travel agent, just because they think they’d be good at it! My concern now, as a small business, is if we return to a TCF model, do we have to cough up multiple thousands of dollars again to join a new entity of TCF, money which was never returned to us when TCF was disbanded?

  4. Andris says:

    As a consumer and traveler I have watched the contraction of the travel agent industry as the big players take a dominant position in the market place as the internet disrupts and changes the nature of the industry .

    Much of what is offered on the internet is not a bargain and the dominant players there manipulate the bookings process for commercial advantage

    The ACCC new guidelines on comparative web sites aims to address this issue under the Australian Consumer Law . In my experience a more robust approach is required

    The evidence of the last few months re the Travel industry new arrangements with the abolition of the Travel Compensation Fund is clear .

    There has been a monumental policy failure and a grab for money as disbursements to State governments from the Travel Compensation Fund wide up . That is consumer money , contributed and owned by consumer’s and held in trust by the TCF on their behalf

    To add insult to injury to consumers in correspondence I have had with Consumer Affairs Victoria they have refused to act on the issue. There response has been my correspondence will be filed in what is effectively the waste paper bin solution . In my view a untenable disgraceful response.

    A prime function of government consumer protection offices is to monitor the market place for issues of consumer detriment . The abolition of the TCF has resulted in demonstrable consumer detriment were non existed previously .

    The Victorian response is NIMBY and in other states were criminal issues are not involved effectively advise consumers that you may get back a few cents in the dollar in a few years time from the liquidation process

    In the case of effective criminal proceedings ,those consumers may hit the jackpot in that they may be able to claim as victim’s of crime

    There is a urgent need for COAG to reinstate the TCF retrospectively and pay out the effect consumers from the surplus $25 million funds currently available.

    After all they are funds provided by consumer’s and held in trust on there behalf by State government’s.


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