Perspective – May 2014

WITH travel agent deregulation just weeks away, the compelling, over-riding message is surely the upbeat mantra being preached by AFTA and the Council of Australian Tour Operators (CATO) – that travel agents now have their future in their own hands.

AFTA chief executive Jayson Westbury and CATO general manager Peter Baily have thrown their support behind industry self-regulation and the voluntary AFTA Travel Agent Accreditation Scheme (ATAS).

Westbury goes so far as to claim ATAS has the potential to reverse the trend away from bricks and mortar agents to the internet. He says promoting awareness of the professionalism of ATAS accredited agents will drive consumers through the doors of their premises.

It must be said that Westbury and AFTA general manager accreditation Gary O’Riordan and his team have done a remarkable job in bringing together all the elements of ATAS.

In consultation with the industry they have drawn up a code of conduct and established accreditation criteria including proof of solvency (duh!), acceptable complaints handling procedures and public liability and professional indemnity insurance.

They have set up the necessary assessment procedures and compliance capabilities.

They have put in place strategies for marketing accredited agents to consumers (and contingency plans for crisis management and brand risk management if this should become necessary).

They have collaborated with governments and consumer advocates, notably Choice, in the formation of an independent dispute resolution body.

They have worked to give ATAS agents an agency insolvency insurance option – and, an industry first, scheduled airline failure insurance and end-supplier failure insurance.

And they have kept the industry informed all the way along, conduct-ing workshops nationwide. The final round of workshops has just taken place.

However these last workshops did demonstrate that lingering concerns remain among many agents.
In a general sense, my response to those who call ATAS “flawed” is – Well, it probably is. Who has ever produced perfection at the first attempt? The beauty of a self-regulated industry scheme is that the industry can review and adapt and improve it without having to grapple with legislators and government red tape.

At the same time it should be acknowledged that by no means all the concerns can be dismissed as nitpicking. They include the following:

‘I don’t see why we didn’t just stay with the TCF’

This is a sentiment that I have heard expressed by many successful and experienced agents for whom I have great respect.

But it puzzles me.

For years I heard agents complaining about their money being spent to bail out the clients of rival agents who, due to incompetence, malpractice or worse, went broke.

Now I hear agents complaining because their money will no longer be used in this way!
The TCF did indeed provide consumers with protection. It effectively licensed them to seek cheap deals with impunity.

They could confidently pay prices seemingly too good to be true because they would be bailed out if the deals were indeed too good to be true and the discounting travel agency collapsed.
And who provided the bail-out money? The prudently managed agencies that could not afford to match the prices of their irresponsible rival.

If the removal of the TCF injects a dash of caveat emptor into the marketplace this will be no bad thing and should play out to the advantage of accredited professionals.

Deregulation means governments are now treating the travel industry like any other industry – as sufficiently mature to operate within Australian Consumer Law without additional encumbrances.
The travel industries of other countries around the world have long been considered grown-up enough to be treated this way.

As Westbury says, deregulation means the industry no longer exists in “an artificial bubble”.
Yes, there will be business failures as in every other industry but the fact is that the TCF did not provide protection against some of the travel industry’s most spectacular collapses (like CIC or Air Australia).

And online overseas agents and suppliers were not covered, giving them a cost advantage over bricks and mortar agents with no choice but to take on the cost of TCF membership.

‘There won’t be sufficient funds for a substantial initial marketing campaign’

There is considerable substance to this criticism. One could not have asked for a more professional presentation than the outline of ATAS marketing strategies presented to the final round of workshops by AFTA marketing and communications manager Joanne Trelaggan.

But initially at least those digital and social media strategies surely need the kick-start that would be provided by a powerful television campaign.

In the early days of ATAS, Westbury was optimistic state governments could be persuaded to hand over around $6 million of the money in TCF coffers – described as travel agents’ money although this is a moot point as the governments poured money into the TCF when it effectively went broke in the wake of the Ansett collapse.

Some of that $6 million was to be used to set up ATAS; the remaining millions were to be allocated to marketing and promotion.

In the event, the state governments handed over only enough to set up ATAS and it seemed that AFTA had been rebuffed in its quest for marketing funds.

Pleasingly, however, Westbury tells me he remains hopeful (he did not say confident) that he can yet convince state governments to make substantial marketing funds available. The industry should wish him well in his efforts.

Insurance late to market; insolvency insurance should be mandatory for ATAS

Yes, the insurance policies that will be such an important complement to ATAS accreditation for many agents have been a long time coming and at presstime agents were still in the dark about the likely cost of insolvency insurance – Travel Agent & Intermediary Failure Insurance (TAIFI) as broker, Gow Gates, describes it.

On the plus side, the broker has promised a two week turnaround for agents seeking quotes.
ATAS critics, notably Travel-Managers chairman Barry Mayo, have pressed unsuccessfully for this insurance to be an ATAS accreditation requirement. I must say I agree it would enhance the credibility of ATAS.

But individual agents – and groups – taking out policies will still be able to promote the guarantee of funds security they are offering consumers.

The nimble will secure a market edge which is what happens in a deregulated environment.
Mayo makes the point that the collapse of an ATAS agent without insurance will tarnish all, including those who have taken on the added cost of insurance.

Westbury says there are measures in place to counter such fall-out and he calls the suggestion that “a couple of bad eggs” will tarnish all “preposterous scaremongering”.

Mayo, incidentally, is awaiting TAIFI details before deciding if TravelManagers will sign up to ATAS. If he does sign on he will continue to work for a “more robust” scheme.

If he decides against this course, no problem. That’s the beauty of deregulation.

If he decides in favour, as I hope he does, he can use ATAS’ built-in review processes to advocate change. That’s the beauty of self-regulation.

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