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Travel agent reputation ‘diminishes with every agency collapse’

March 29, 2016 Business News, Headline News 3 Comments Email Email

egtmedia59Recent news of trading problems hitting a big Australian travel firm has prompted a senior travel industry figure to challenge state governments to state their position on an increasingly important matter.

Namely, how do state governments feel about the growing number of travel agency collapses and resulting consumer losses since the Travel Compensation Fund (TCF) was abandoned? 

TravelManagers’ Chairman Barry Mayo says the question must be asked. What are the views of the individual state governments on the issue? Mayo warns of the risk that “more and more people will lose confidence in travel agents”.

Mayo says the travel industry “has unfortunately in the last two weeks received further negative consumer press” with Gold Coast-based travel company Australian Escapes being placed into voluntary administration earlier this month. Mayo points out this was reported in Sydney’s Daily Telegraph and the Gold Coast Bulletin on 16 March, and in the 22 March e-newsletter, with “well in excess of 15,000 consumers affected”.

Speaking more generally, Mayo said: “If nothing else, the significant number of Australian consumers that have incurred losses as a direct result of eight reported collapses since May 2015 prove consumer protection against a minority of travel agent insolvencies is clearly an issue.”

TravelManagers prides itself on its reputation as a true customer advocate and Mayo has consistently lobbied following the closure of the TCF for the industry to retain some form of industry-wide consumer protection.

“The situation being experienced by Australian Escapes’ members, and customers from previous travel agency collapses, is precisely what TravelManagers was fearful of when it first voiced its concerns,” Mayo said.

“I’m confident the now reportedly thousands of customers out of pocket due to recent travel agency collapses would wholeheartedly support a consumer protection component being a requirement for industry participation in an accreditation scheme,” Mayo said in an issued statement.

Mayo strongly believes state governments are guilty of disbanding the TCF without ensuring the travelling public was provided with an effective form of consumer protection against travel agent insolvency.

“It can no longer be disputed that consumer losses now being experienced are as a direct result of state governments disbanding the TCF and replacing it with an industry accreditation scheme that fails to demand robust financial criteria or deliver consumer protection,” he said.

“Government and individual members of the industry must now acknowledge these consumer losses are not going to cease and recognise that an accreditation scheme without consumer compensation is questionable from both consumer and industry perspectives.”

Mayo highlights that the travel industry as a whole needs to be concerned with the declining consumer confidence in travel agents that grows with each negative media report.

“The real risk to the travel agent community is that more and more people will lose confidence in travel agents and may opt to book directly with suppliers both in Australia and overseas.

“How many customers and potential customers will now choose to book their travel arrangements direct with individual suppliers instead of obtaining the professional advice and multiple benefits a travel agent will provide?  It will be future bookings that will be affected and when the impact of negative press in the consumer realm starts to really become apparent.”

Mayo believes the question that state governments need to answer is simple:

“Will the state governments take action to insist on an alternative form of consumer protection against travel intermediary insolvency that is consistent and universal before more consumers are out of pocket and the integrity of the Australian travel agent industry is further compromised?

“Why do the state governments find this so hard to answer?” Mayo asks.

Edited by Peter Needham

Currently there are "3 comments" on this Article:

  1. AgentGerko says:

    My concern is that the well-publicised failure of a few small agents and the apparent insignificance of ATAS accreditation will drive consumers to only use the major groups because of the perception that size means security. That would be a very unfortunate irony considering that some of these companies are members of the same AFTA board who oversaw the demise of the TCF and the creation of ATAS.

  2. Andris Blums says:

    Mr Mayo sums up the situation well , the demise of the Travel Compensation Fund for whatever commercial and political motives not only impacts adversely on consumers it will also diminish the industries reputation and client base which in the long term will not be confined to the small family based operations .

    In an age of rapid business disruption based on new technology the cancer of a vanishing client base to alternate providers will also inevitable adversely effect the big corporate players

    An example is the media , Fairfax’s advertising rivers of gold are gone to disrupters like Seek and almost inevitably technological disruption will force drastic changes to the travel agent model

    The abolition of the TCF will inevitably be seen as accelerating that process .

    Recent media reports foreshadow that by 2030 , 5 million current jobs in Australia will disappear .In some occupations , including professional occupations that loss could be 90% .

    I would argue that the travel industry is ripe for such a major disruption , in fact the process is underway and that the abolition of the TCF is a pivotal decision that will be seem in retrospect as a in flexion point that accelerated the process

    The return of the TCF is desirable but the damage has been done , a self inflicted would .

    The real issue now is what can be salvaged , the re in statement of the TCF is a necessary start

  3. Peter Watson says:

    Once again Barry Mayo and his Travel Managers team has it right. The concerns are threefold – First the customer who under this system stands to lose money – yes there are some occasions when some lost funds can be recovered under current law – but there are huge holes; Second – the travelling public can and will easily lose faith in travel agents and start booking direct in even larger numbers than they do now – this is a major challenge in fact the biggest challenge the Australia Industry has ever faced. Finally – the alternative to two is as Agentgerko suggests above – the customers will start to move towards the BIG BOYS – in the belief (party mistaken by the way) that their money will be safe and the smaller player will lose out all together. The cynic in me can’t help but wonder if this is in fact what was the intention (of at least some of the players) in the first place!

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