Kumuka goes bust

Kumuka goes bust
By admin


The 30th anniversary of Kumuka Worldwide’s founding is mere months away, but no celebrations are being planned. There’s no cake or balloons and certainly no party plans. Instead, staff are hunting for a job after the company went into administration last week.

Revealed in a blink-and-you-miss-it statement, Kumuka’s head of Asia Pacific, Warren Smith, confirmed no tours would operate after July 22. Marking his first major announcement since stepping into the role just two months ago, Smith advised passengers to make alternative arrangements with their agent and to contact the Travel Compensation Fund (TCF) to recoup their losses. Early reports suggest Kumuka’s UK arm was a victim of adverse economic conditions, but questions remain as to how a company with an average of 12,000 passengers annually could fold after 29 years.

THE AFTERMATH

With the dust barely settled from the Qantas grounding and the Air Australia collapse, agents are again tackling calls from distressed customers, with hundreds left out of pocket. There is still no indication of how significant the damage will be, but TCF chief executive Glen Wells is predicting that Kumuka’s collapse will make the history books.

In the two days following Smith’s announcement, the TCF had to put on extra staff to deal with a deluge of claims, some of which added up to nearly $30,000. With hundreds of calls in just 48 hours, Wells said the downfall could affect thousands of customers and potentially leave a damage bill running "into the millions".

Meanwhile, Australian Federation of Travel Agents (AFTA) chief executive Jayson Westbury said he expected only a small ripple effect to follow. In the days following Kumuka’s collapse, AFTA had not received a single call from a travel agent or travel business. Labelling the company a "tiny niche player", Westbury shrugged off concerns that the collapse would have significant repercussions for Australian travel agents. "This won’t be as big a calamity as everyone thinks," he said. "It’s nothing even close to the Air Australia collapse. If anything, it’s like a small travel agency collapse."

THE RESPONSE

Damage bill aside, Kumuka’s collapse has sent shock waves through the adventure travel market. Adventure World, Intrepid Travel and Peregrine Adventures were quick to offer their condolences and step in with discounted rates for affected customers.

But with the company’s key rivals all reporting financial gains last year, competitors have struggled to put their finger on what went wrong. With the strong Australian dollar bolstering sales in recent months, Chimu Adventures expressed surprise at Kumuka’s collapse after reporting a 50% increase in sales over the last financial year. Meanwhile,
G Adventures head honcho Pete Rawley warned that offering massive discounts could spell the same fate for other big players. "We have to get better at promoting who we are and what we offer instead of undervaluing the product we’re selling, Rawley said. "We don’t need monopolies, we need competition to keep pushing our service, our product and our innovation."

MOVING ON

What happens next is anyone’s guess, but the Council of Australian Tour Operators (CATO) is assuring people that the Australian industry is still in good shape. While the global situation continues to unsettle international markets, CATO general manager Peter Baily notes that Australia is still continuing to perform. "Australia has been largely sheltered from the global situation, and Kumuka’s collapse doesn’t have anything to do with our market," he said. "Our wholesalers are all having a good season, so this isn’t indicative of tourism in Australia."

Further details will emerge in the coming weeks, but the TCF expects it will still be some time until the downfall escapes the headlines. While most TCF claims are refunded within one week, others processed with credit card providers can take several weeks to be approved.

And with the added pressure of rescheduling holidays, Wells said it could be months until Kumuka’s collapse is resolved. Westbury, however, asserts that the matter will blow over in a couple of weeks as Kumuka’s key competitors pick up the spoils. But even he admits, only time will tell.

Email the Travel Weekly team at traveldesk@travelweekly.com.au

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