Perspective – June 2014

Ian McMahonTRAVEL Counsellors’ change of heart on the AFTA Travel Accreditation Scheme (ATAS), separately reported on this page in our Business Briefing section, has illustrated an important point about the voluntary travel agency accreditation scheme.

It is a point that I had not previously fully appreciated. As a result I have travelled my own “road to Damascus” and changed my views about the desirability of travel agency insolvency insurance being a mandatory ATAS requirement.

I had believed that making it compulsory for members to have Travel Agent and Intermediary Failure Insurance (TAIFI) – as strongly advocated by TravelManagers chairman Barry Mayo – would enhance the credibility of ATAS. Indeed I said so in our last issue. But I now take the point illustrated by Travel Counsellors signing up for ATAS.

The point is this: Adherence to an agreed set of professional and ethical standards need not be coupled with a requirement to purchase a specific travel agency insolvency insurance product.

Thus Travel Counsellors is happy to join with fellow Australian travel agents in a scheme setting standards for members including that they abide by a code of conduct, adhere to membership criteria, such as acceptable complaints handling procedures, and have public liability and professional indemnity insurance. Backing this up for consumers will be an independent dispute resolution body set up under an independent chairman in collaboration with governments and consumer advocates.

And for agents there will be a marketing campaign telling consumers about the advantages of dealing with an ATAS professional.

Obviously Travel Counsellors, like just about all the large agency groups, can see the advantages such a collective approach can deliver to the industry.

But the home-based agency chain has also been clear from the outset that it will be going its own way in offering its agents and its customers a credible, robust guarantee that their funds will be safe. So why should it be barred from ATAS membership simply because it chooses not to buy a particular insurance product?

In fact, as MTA’s Roy Merricks points out, it is apparent that the majority of agents will choose not to take the TAAFI route. (Indeed it is becoming clear that the crucial insurance products will be airline and end-supplier failure insurance, offered for the first time in Australia with the advent of ATAS.)

Helloworld, for example, has said it will be offering a “Customer Protection Policy, backed by our unique insurance policy” (not TAIFI, as I understand it).

I suspect there are other groups that will set up a self-insurance mechanism. For many individual agents an attract-ive option, rather than TAIFI, is likely to be the Macquarie Bank trust account product which will cost them nothing and provide a return in the form of interest payments.

And some, of course, will not take any measures.

It will then be open to others to attempt to gain business from them by marketing the protection they offer. As I wrote last month: “The nimble will secure a market edge. That is what happens in a deregulated environment.”

And as of now, that is the environment in which the industry operates,