The Week in Focus – Reform: now for the hard part

The Week in Focus – Reform: now for the hard part
By admin

So what happens now?

No Travel Compensation Fund, no travel agent licensing and no financial scrutiny, all to be phased out over the next 12-24 months.

The industry got what it wanted; to self govern and self regulate. All that remains now is the small matter of working out how to do that in a cohesive and viable manner that ensures the industry retains its professionalism.

That task will fall to a large extent upon the Travel Industry Transition Plan Working Group, or to use its snappy acronym, TITPWG.

The first task of the Australian Federation of Travel Agents (AFTA) will be to determine who will sit on the working group, a not insignificant task in itself given the pressure to ensure all industry sectors are represented and their views heard.

Despite exhaustive work by AFTA, led by chief executive Jayson Westbury and his genuine belief that reform was long overdue, there was probably an element of surprise when ministers voted by a majority to phase out the TCF and repeal travel agent licensing.

Politicians are hardly in the business of removing red tape so to do just that came as something of a shock.

Even AFTA board members themselves, along with Westbury, were probably taken aback. When an issue drags on for years, four in this case, you become conditioned to disappointment, delay, political prevarication and general dithering. Take the Sydney Airport fiasco as a classic example.

But reform is what the industry wanted, and reform is what the industry will get.

If AFTA thought it was hard work getting reform across the line, the next phase of the process will in some respects be that much tougher.

In some quarters there is nervousness, partly as a consequence of a lack of meaningful detail about an alternative structure.

There has been broad statements from AFTA about a voluntary accreditation scheme which may or may not include some form of financial checks, while the creation of "commercial solutions" to address business insolvency was a requirement of consumer affairs ministers.

More likely than not, that means B2B insurance cover. However, there has been a suggestion that agency groups could form their own solution. Certainly TravelManagers has already indicated it will do its own thing – whatever that may be – if the new structure fails to satisfy.

To quote House of Travel director Barry Mayo, the business has "sufficient resource" to take what steps it considers necessary to ensure consumer confidence is retained.

Consumer confidence is at the very heart of this issue. Some argue that the TCF engendered that confidence by refunding consumers in the event of a wholesale or agency collapse. That is true to a point. The counter argument is that very few people are even aware of the TCF's existence so surely it's impossible to have confidence in a system that you don't know exists.

Furthermore, the TCF was far from perfect, even its chief executive Glen Wells has admitted as such. As we all know, its remit was too narrow in today's world.

What the TCF did however was protect the industry from negative publicity, and to an extent it is probably not given credit for. With many consumers repaid their money following a collapse, we didn't see tearful consumers on TV.

It will be interesting to see the coverage of the first failure in the post-TCF era, particularly given how it was the industry itself which pushed for that compensation element to be removed.

For Flight Centre, that scenario may not matter. It is the giant of the retail travel industry, a household name that is unlikely to suffer any collateral damage. On the contrary, it may drive consumers to use their services given its obvious financial strength.

But it could be a very different proposition for the smaller agent. Consumers may become wary of paying thousands of dollars to a small business months before they receive what they paid for.

Indeed, that is one things that may well change. Suppliers, nervous about a lack of stringent financial oversight by the TCF, may well start insisting money is passed on by agents quicker than it is now.

Another interesting requirement of the industry, as outlined in the consumer affairs communiqué, was the "appropriate disclosure of consumer risk in agency transactions".

Of course that is open to interpretation but does that with mean each booking must come a warning that compensation or refund is no longer available?

There are many issues and scenarios to discuss on this issue, and AFTA, together with the rest of the industry, will do just that, starting today.

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