Recent reports of travel company collapses in Britain and in Australia reveal stark differences in the way consumers are treated in those two countries.
British consumers are far better protected. Since 1973, by law, every UK travel company which sells air holidays and flights is required to hold an Air Travel Organiser’s Licence (ATOL). An ATOL functions rather like Australia’s former Travel Compensation Fund (TCF) in providing consumer protection. It’s administered by the UK Civil Aviation Authority.
If a travel company with an ATOL stops trading, the ATOL scheme protects customers who had booked holidays with the firm. It ensures they do not get stranded overseas or lose money, as happens regularly in Australia when travel agents fail.
Just a couple of days ago, Britain’s Association of ATOL Companies (AAC) warned British consumers about the risks of booking with unprotected companies.
“It is vital that customers only book with a business holding a valid UK controlled ATOL licence, without it, your holiday may depend on a wing and a prayer,” chair Lindsay Ingram told a British travel industry newsletter.
In Australia, consumers were for years protected by state licensing. It required all Australian travel intermediaries to be members of the TCF, which provided consumers with comprehensive protection in the event of a travel agency collapse.
That was until 1 July 2014, when travel agency licensing was collectively abandoned by the state and territory governments. That resulted in the dismantling of the TCF and its replacement by ATAS (the travel agent accreditation scheme operated by AFTA) which in itself does not deliver consumer protection but relies on individual accredited agents to source and provide their own individual forms of consumer protection.
While British consumers are regularly directed to ensure that the travel companies they deal with are members of ATOL, far less information is published in Australia about consumer protection for Australian travellers, which varies widely. Finding details about which travel agents offer protection against collapse, and under which circumstances, can be a challenge.
The collapse last month of Lowcostholidays in the UK, just before the more recent Elegant Travels collapse (see: Holiday firm blames its collapse on credit card fraud), has generated massive adverse publicity in all sections of the British media.
Most clients of Elegant Travels were covered by ATOL, but in the Lowcostholidays case, many consumers were not covered because the company had transferred its headquarters out of Britain into Spanish jurisdiction. UK newspapers and websites are full of lurid stories about holidaymakers losing all their carefully saved money, couples having their honeymoons ruined, families forced to break to their children the news that promised holidays are lost forever.
Those collapses and the reaction and backlash they are producing might well serve as a warning to the Australian travel agency community, and to Australia’s state and federal government consumer affairs ministers.
Written by Peter Needham