AFTA View – September 2012

/images/frontpage pointers/regular columns/JasonWestbury.jpg

Jason WestburyCrazy, confusing, unfair – Kumuka collapse shows need for reform

By Jay Westbury, chief executive Australian Federation
of Travel Agents


THIS month AFTA will once again be engaging KPMG to assist us in preparing our formal response to the Travel Industry Transition Plan (TITP) consultation draft, which was released in late August.

The TITP outlines significant reform to the way travel agents are regulated in Australia. While the consultation draft (the full document is available on the website) is heavy reading and very detailed, it puts a number of questions to stakeholders about the transitional arrangements being proposed and indeed the ultimate outcome that is being sort by the Consumer Affairs Ministers.

AFTA with assistance from KPMG will respond to all aspects of the consultation draft as we have done on each occasion that government officials have sought our input.

Importantly, I feel that this will be the final submission in what has been a very long process. AFTA will have prepared in excess of 950 pages in submissions and spent several hundreds of thousands of dollars informing this process. In the end, the ultimate reward will come in the form of new regulatory arrangements that will “future proof” the travel agency community going forward and ensure thatAustralian travel agencies are on a level playing field with all parties they compete with in selling travel products.

There are of course a number of questions still to be answered and the AFTA response to the paper will spell out the industry’s views on how to address the various questions being posed.

Curiously, the latest collapse which came about from the actions of the directors of Kumuka have very clearly shown how the current arrangements do not serve the industry at all well.

Reports have surfaced that give rise to a range of questions about how they [Kumuka] were able to continue to trade in Australia and what happened to the money that was taken from Australian consumers.

On the surface from the reports that have been made available, the Australian operation was liquid and operating well. Clearly that was not the case for the “mother ship” back in the UK and it would appear that monies got moved around the world to cover debts.

A key question is whether there was appropriate regard for the use of the clients’ funds taken in advance of travel.

Much of this money came from business transacted with travel agents who are afforded no remedy as a consequence of the collapse and once again are left holding the baby, the bath and bathwater as they refund consumers’ money via credit card charge-backs.

Meanwhile the directors of Kumuka simply throw their hands in the air and refer consumers in the UK, Canada and Australia to the TCF style schemes.

The other countries they operated in had no such schemes. Some would say that the cover provided is good. I say it is unreasonable, old fashioned and unacceptable as it is travel agents who have provided the TCF with all its money TCF which then pays for “some” consumers who dealt in cash. Crazy confusing and unfair.

Compelling reasons for the TITP’s recommendations to wind up the TCF.

So September is going to be a busy month as we prepare the response to the consultation draft and get ready for the transition that is ahead of us all.

Future proofing the travel industry is key and at the forefront of both the travel industry transition plan and indeed the policy position being taken by AFTA.

Jay Westbury’s AFTA View column appears monthly.