Perspective – March 2012

A $1m Air Australia palliative?

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Ian McMahon

A $1m Air Australia palliative?

ELSEWHERE in this issue you can read Jay Westbury’s AFTA View column in which the AFTA chief executive details the work being done on a number of fronts to ease the lot of travel agent who find themselves the “meat in the sandwich” between the financially bereft airline and the consumers who booked tickets for flights that will never eventuate.

He includes the following cryptic comment: “It is also apparent that there are not enough powers in place to ensure that identifiable consumer funds held in trust must be returned to consumers or their agents prior to the administrators seizing them.”

In the case of Air Australia what identifiable consumer funds are being held in trust?

Surely Westbury can only be referring to the money paid for Air Australia tickets which, at the time of writing, remains in the hands of IATA’s Bank Settlement Plan.

And clearly he is fighting to have those funds returned to the consumers who handed them over for air travel that was not delivered.

Industry sources place those funds between $900,000 and $1 million. Returning them to the consumers who trustingly paid them out would do much to ease the pain of the Air Australia collapse.

But what are we to make of his comment that there are not enough powers in place to ensure this is the case?

Obviously there must be a tussle taking place – presumably between the receiver on one hand and AFTA and IATA on the other – over who is entitled to the money.

By the time this is published the outcome of the tussle may well be known. I hope that it spells success for Westbury’s efforts.

No room for schadenfreude

THERE are a number of ironies in the Australian Competition and Consumer Commission’s prosecution of Flight Centre for alleged retail price maintenance.

Not the least of these is that for years the most rigid retail price maintenance was enforced on agents by airlines and it was action by retailers such as Flight Centre that helped break that down.

Flight Centre boss Graham Turner is gilding the lily somewhat when he claims his company was first to do this – Isi Leibler’s Jetset and the Gordon Foundation were around long before Flight Centre was formed – but Flight Centre was an important player.

Another irony is that the wider travel agency community, which generally feels little affection for its red and white competitor, has no room for schadenfreude.

Learned lawyers and judges will decide the outcome of the case but the principle at stake is one that affects all travel agencies. Does a travel agency which has invested in premises, people, technology and marketing to provide an airfare distribution network have the right to insist on access to all of an airline’s fares when it negotiates a deal for preferred sales through its network?

In other words should it be able to negotiate a deal which requires the airline not to retail fares that undercut those it is providing to its preferred agent?





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