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Bestjet stink hits fan. Is travel compo U-turn in wind?

January 9, 2019 Headline News No Comments Email Email


Australian media, both print and TV, is turning the blowtorch on the Bestjet fiasco like never before, raising the possibility that consumer travel compensation in Australia – or lack of it – may finally be re-examined.

The Australian newspaper yesterday ran an article headlined “Bestjet collapse exposes law flaws” and Channel Nine’s A Current Affair carried a report last night about the fallout from Bestjet’s failure. Other media outlets are hot on the trail.

A Current Affair showed Peter Goldsworthy and his sister Kim, who claim they lost AUD 17,000 when Bestjet went into administration.

The program interviewed consumers who said they felt “gutted financially” and “totally conned”.

Tears flowed. One woman asked: “My question is, where the hell is the money?”

Some consumers got their money back; others were less fortunate.

Thousands of consumers have been left out of pocket after Bestjet and its subsidiaries, Wynyard Travel Pty Ltd and Brooklyn Travel Pty Ltd, went into voluntary administration on 18 December 2018. Nigel Markey and Bradley Hellen of Brisbane-based accounting firm Pilot Partners have been appointed as administrators.

When NSW registered nurse and author Kate Ryder (who says she is owed more than AUD 3000 after booking two return flights to Europe through Bestjet) set up the Bestjet Fiasco Action Group on Facebook on 21 December 2018, she said one of the problems she faced was “a lack of widespread media interest in this story, apart from articles written by Rosemarie Lentini on behalf of NINE finance”.

The lack of interest may have been because of the timing. The media tends to wind down over the Christmas-New Year holiday break.

The media is now back on the scent, full force, and politicians are paying attention. The Bestjet Fiasco Action Group has expanded from Facebook onto the general internet with the launch of a website: www.bestjetfiasco.org.au

The article in yesterday’s Australian, “Bestjet collapse exposes law flaws” was written by Anthony Klan, an investigative journalist specialising in business malfeasance and government corruption.

The thrust of Klan’s article is that the dismantling of the Travel Compensation Fund (TCF) and travel agency licensing in 2014, plus flaws in the industry-run AFTA Travel Accreditation Scheme (ATAS) that evolved as a result of the TCF’s closure, have deprived consumers of the protection previously available throughout Australia (other than the Northern Territory).

Screenshot from www.bestjetfiasco.org.au

Klan wrote yesterday that thousands of Bestjet customers had been left exposed “to potential losses worth millions of dollars because longstanding consumer protection laws and travel agent licensing requirements were scrapped by state governments in 2014 in favour of industry self-regulation in the name of cutting red tape”.

Many in the travel industry would consider that to be a pretty good summation of what happened.

Klan goes on to point out that until 2014, consumers booking services through travel agents, such as flights and accommodation, were reimbursed by the TCF if the travel agent they used collapsed or otherwise failed to deliver the services paid for.

Despite AFTA’s efforts to publicise its ATAS scheme, Klan notes that “membership of ATAS is voluntary, AFTA has no authority to enforce standards against agents who aren’t accredited under the scheme and many consumers are unaware of the scheme’s existence or relevance”.

Klan’s claim that many consumers remain unaware of ATAS is likely to annoy AFTA, which has produced newsletters and press releases over the past three to four months stating that recent research has revealed that “82% of consumers will look for an ATAS accredited travel agent when booking travel”.

The ad run by AFTA (below) has been viewed by more than 142,000 people on YouTube alone, plus many more on the Seven Network and other channels on which is screened.

It’s worth remembering that under the previous TCF and licensing regime, Bestjet would have been subject to:

  • Obtaining a licence (and meeting more stringent criteria to trade than applies to ATAS);
  • An annual financial review of externally audited accounts for renewal of licence;
  • Approval for the change of ownership to proceed.

If the TCF regime still applied, assuming Bestjet would have held a licence, the three processes listed above would arguably have forced Bestjet to take corrective financial action or cease to trade, or limited the extent of financial losses.

It’s reasonable to argue that had Bestjet been licensed and a member of the TCF (as previously required) these processes would have reduced consumer disruption and stress (if not eliminating all losses) and curbed damage to the industry’s reputation.

Written by Peter Needham



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