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TravelManagers’ Comment on AFTA Travel Agents Accreditation

October 22, 2013 Mobile travel consulting No Comments Email Email

TravelManagers’ view, following the August industry consultation workshops is that there are still many unanswered questions regarding ATAS. TravelManagers’ Director, Barry Mayo suspects many travel agents will be seeking more substance and clarity than was available in the previous workshops.

“In fairness these workshops were primarily a fact gathering exercise with the agenda for the upcoming transitional workshops appearing to address some of these concerns,” Mayo is quick to point out.

20130914_190755Mayo is of the view that a truly positive outcome from the initial workshops was AFTA’s confirmation that the insurance policy against supplier default ensures travel agents will no longer be out of pocket as a result of credit card charge backs.

“If this eventuates, travel agents will owe AFTA a huge vote of thanks,” he says.

Mayo advises from TravelManagers’ perspective there are four main concerns as summarised below and addressed throughout this article:

1.     The absence of adequate information to form an educated opinion around the consumer protection effectiveness of ATAS.

2.     Without accreditation being mandatory, what will be the effect on the travel agency community as a whole, when there is a failure or eventually a number of failures?

3.     Assuming non-mandatory accreditation and insurance is not mandatory for voluntary accreditation, what is the point of being accredited when it is possible for an accredited member to fail and subsequently their clients are severely disadvantaged with no recourse?

4.     What does post-TCF mean for the consumer? How will it impact them and how will it influence dealing with a travel agent?

The Absence of Adequate Information

  • What is the minimum criterion to qualify for membership of ATAS?
  • How will the annual ATAS membership fee be calculated?
  • What, if any, insolvency protection measures (including financial reporting requirements) will there be and how will these impact on insurance premiums against travel agency insolvency i.e. self cover or supplier collapse?
  • Which suppliers will and will not be covered against financial default and/or failure to provide a contracted service?
  • What are the insurance company criteria for determining which suppliers are and are not covered?
  • What does this mean for the travel consultant who has a client with a mix of suppliers, some who are covered and others who are not? Presumably the travel agent will have a responsibility to ensure their client is informed of the booking segments where they are not covered.
  • Insurance policy inclusions and exclusions can change. Can the industry expect some continuity and certainty as was the case with the TCF?
  • What are the individual premiums for self cover and supplier collapse likely to be? When can an indication of these costs be expected?
  • What can the industry expect in terms of the time required to process and settle consumer claims? If settlement is lengthy there is greater likelihood of adverse consumer media attention. The current standard delivered by TCF is an average of five working days.

The effect if accreditation isn’t mandatory and insurance is not mandatory for voluntary accreditation

The question still remains around protecting accredited travel agents from the fallout from the failure of travel agents who choose not be accredited, or are accredited but choose not to have insurance against self cover insolvency and/or supplier collapse. A key part of the TCF’s activity was preventative by identifying issues before they occurred. This aspect of the TCF function appears to have been diluted if not abandoned at this stage. This should be of great concern to existing licensed travel agents.

An unacknowledged benefit of the TCF has been limiting negative media coverage when travel industry insolvencies occur such as Kumuka Worldwide Travel and Classic International Cruises. Damaging publicity was avoided due to the TCF providing protection against consumer’s suffering financial loss or hardship.

There is a real risk for negative publicity under a voluntary accreditation scheme as presently proposed. Should consumers suffer significant financial loss and/or trauma; these very real situations can expect to be prime time viewing on television current affairs shows which will be extremely detrimental to the travel industry as a whole.

With accreditation being voluntary, there will be no definitive barrier to entering the industry. This has the potential to increase the number of insolvencies or failure to pass on consumer funds. ATAS is relying on action under the ACL to detect unlawful or incompetent behaviour. A detrimental consumer experience could attract negative media coverage, before an unfit agent is removed from the industry and can be compared to closing the stable door after the horse has bolted.

Possible fallout from unqualified, under-capitalised travel agents entering the industry and operating outside ATAS has resulted in many agents attending the industry consultation workshops not being in favour of the voluntary aspect of the accreditation scheme and arguing that ATAS should be mandatory.  There is, in TravelManagers’ opinion, a strong case for a ‘public interest test’ with both the consumer and travel industry benefiting from mandatory accreditation. It has been suggested that such action would be likely to have more success in the future if experience shows this concern to be fact. Again, this is akin to closing the stable door after the horse has bolted!

Seeking to have ATAS made mandatory before we understand enough about its effectiveness and cost (in both the immediate and long term), is similar to disbanding the TCF without considering the option of improving its efficiency and reducing its cost to industry and before knowing what the alternative would deliver. However, it does appear we are left with little choice otherwise the industry will have to contend with unaccredited agents operating with no regulation, prudential oversight or financial discipline, creating havoc for those travel agents offering a professional and responsible service.

What Does It Mean For The Consumer?

A weakness in the current communication on what the successor to state licensing and the TCF should encompass is an absence of empathy with the consumer. We say this because it is the consumer who will ultimately decide the fate of retail travel distribution and therefore important we place their interest at the top of the industry’s priorities e.g. Is ATAS going to make the consumers decision to use a travel agent easier?

AFTA has requested an allocation of TCF reserves to be used for consumer advertising promoting ATAS. This would appear to have questionable benefit unless ATAS accreditation insists on self and supplier insurances with advertising clearly differentiating the benefits of dealing with ATAS accredited travel agents from non-accredited travel agents. Funding may be adequate for the first year however what plans are there for subsequent years and how will these be funded?

The next phase of the ATAS consultation process begins in early November.

“If you are a travel agency owner you owe it to yourself to attend these workshops. Even if you disagree with my concerns, we urge you to have your say. Consumer confidence in retail travel distribution is critical and without it your business could change forever,” says Mayo.

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