Perspective – February 2012

Collapses point to TCF inadequacies

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Ian McMahon

Collapses point to TCF inadequacies

TWO major financial failures in recent weeks will disrupt the travel plans of thousands of Australians.
They vividly demonstrate the gaping inadequacies of the present regulatory system.

In the Northern Territory, a fraud investigation is under way after the disappearance of a Travelscene American Express agent and $200,000 belonging to clients who believed they were paying for holiday travel arrangements.

And in Queensland, Air Australia, formerly Strategic Airlines, has become the latest addition to the long list of wannabe airlines who have failed financially pursuing ambitious plans to establish themselves on the Australian aviation scene.

There is virtually nothing in common between the possible criminality involved in the Northern Territory case and the decision by Air Australia to enter into voluntary administration. Except for these two things.

1) Both will cause immense emotional and financial pain to consumers who have been left holding worthless pieces of paper which they believed would entitle them and their families to realise their holiday dreams.

Many of these consumers will have paid for those worthless pieces of paper with credit cards and it will be interesting to observe the can of worms which may be opened when they contact their credit card companies for refunds on the grounds that they did not receive the service they paid for.

2) In both instances, neither company was covered by the ramshackle, outdated licensing system that is now in place.

It is true that most bricks and mortar travel agencies must be licensed which means membership of the Travel Compensation Fund is mandatory. But this is not the case in the Northern Territory.

And besides that gaping hole in coverage of traditional retail agencies, there is the increasing trend of booking through online travel agencies, many of them based overseas, who are able to thumb their nose at the requirements of Australian regulators.

The collapse of Air Australia, meanwhile, points to another massive inadequacy of the present licensing system – it does not cover any other members of the travel industry besides (some) travel agents.

Seeking to impress upon our legislators the need for urgent action on travel industry regulation, AFTA has frequently pointed to the Ansett collapse.

Air Australia is too small to be called “another Ansett”. But that’s not going to comfort the estimated 4000 Australians hit by its collapse.

In his AFTA View column, the federation’s chief executive Jay Westbury expresses optimism that this year will finally see legislation introduced providing the whole of industry coverage advocated by AFTA.

We can only hope so.





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