After TCF: UK style insolvency insurance?

Issues & Trends – December 2012 / January 2013

After TCF: UK style insolvency insurance?

AS the industry gears up for self-regulation in the wake of the phasing out of the Travel Compensation Fund under the Travel Industry Transition Plan (TITP), supplier insolvency insurance is emerging as an option for agents seeking to protect both their clients and their own commercial interests in the event of supplier failure.

If it had been available to Australian agents in the past, it would have enabled them to bail out clients hit by collapses such as Air Australia, Kumuka and Classic International Cruises.

Importantly, it would also have covered the agents against losses from credit card charge backs.
Supplied by global underwriting and travel credit specialist International Passenger Protection (IPP), it provides three levels of cover for agents – all supplier collapses, all except airlines and airlines only.

UK agents gain cover under the umbrella of the Association of British Travel Agents (ABTA) and it is speculated that similar policies could be negotiated for a critical mass of Australian travel agents.
The approach seems to line up with the TITP’s encouragement of “commercial solutions” and the topic is sure to be on the agenda of AFTA’s newly formed Travel Industry Transition Plan Working Group (TITPWG).

Announced earlier this month, the formation of the group is the first step in erecting a self-regulatory framework to replace travel agent licensing.

The move elicited a positive and welcoming response even from a leading critic of the decision to drop the TCF, House of Travel’s Australian chairman Barry Mayo.

He particularly welcomed the inclusion on the committee of Phil Hoffmann, founder and managing director of Phil Hoffmann Travel, one of Australia’s most successful independent travel agencies, and Andrew Macfarlane, general manager of Magellan Travel Group.

“We have had no communication to date with Andrew or Phil on this matter and recognise it is likely they may have different views to us. However, we believe they are excellent representatives for independent agents,”
Mayo said.

He also called AFTA’s formation of a supplier consultative committee “another positive step”.
He told travelBulletin that House of Travel has never opposed reformation of the TCF or licensing and has in fact been an advocate for national rather than state-based licensing.

“Where we differ is that we have never favoured abandoning the TCF before an effective replacement had been determined,” he said.

The working group charged with determining an effective replacement will comprise, in addition to Hoffmann and Macfarlane, Mike Thompson (Travelscene American Express), Elizabeth Gaines (JTG), Trena Blair (American Express Business Travel), David Smith (Flight Centre) and AFTA chief executive Jay Westbury.

“This group offers a diverse experience from all aspects of the travel agency community and includes AFTA directors and non-directors” said Westbury. “As we move forward with the development of the new scheme and in consultation with the government TITP, we will of course call on others from the industry to contribute in a range of ways.”

The announcement said that the supplier consultative committee will include representatives from cruise lines, airlines and wholesalers.

“We will also be approaching the Council of Australian Tour Operators (CATO), the Cruise Lines International Association (CLIA) Australasia, IATA and the Australian Tourism Export council (ATEC),” said Westbury.

“We will also be working with the suppliers across the travel industry to ensure that they are a part of the new scheme and understand the values being built into the scheme.

“Many suppliers have already expressed interest in being a part of this group and we will confirm the specific details in the New Year.

“This process of working groups will allow the industry to come together to form a really important new scheme that I hope everyone will be a part of.

“It is critical that we get this right and over the coming six or so months I am sure that together the travel industry can create something that works for everyone.”

‘Now things will get interesting’ – AFTA View


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