Carnival reassures agents about ‘direct sales’

Issues & Trends – November 2012

Carnival reassures agents about ‘direct sales’

CARNIVAL Australia has moved quickly to reassure the country’s travel agents that it sees them as partners despite telling consumer affairs authorities: “We may find it more attractive to drive direct sales” if plans to abolish the Travel Compensation Fund (TCF) go ahead.

The statement was contained in the cruise giant’s submission on the draft Travel Industry Transition Plan which envisages the TCF being wound up and bricks and mortar travel agencies being regulated like other businesses under Australian consumer law.

The submission was supposed to be confidential but, embarrassingly for Carnival, was made public on the relevant website before being hastily removed.

The Carnival submission stated: “It seems to us that the practical effect of removing the fund and the licensing requirements will be to pass the risk of travel agent insolvency on to operators.

“Where an agent fails to account for a consumer’s funds, there will be significant pressure on the operator to honour the booking …

“This will inevitably mean operators such as us will need to reassess the ways in which we use agents as a distribution channel.

“Without a collective approach to ensuring the financial stability of agents, we may find it more attractive to drive direct sales.

“While we take some comfort that large wholly owned groups are subject to financial reporting and auditing requirements under other regulatory regimes, in reality there will be no agency or body having oversight over the many ‘mum and dad’ agencies and franchisees that operators currently use.

“In order to protect our business from the risk of agent insolvency, we may well need to follow the example of certain UK operators and insist that customers pay us directly for their bookings where they use an agent. This might in turn have an effect on the usage of travel agents.”

After the submission was made public, Carnival Australia chief executive Ann Sherry depicted it as deliberately highlighting “some of the worst case scenarios” but said this should not be misinterpreted as a
plan to reduce engagement with “valued travel agent partners”.

“The extraordinary growth of the Australian cruise industry in recent years is a direct reflection of the work of the travel agent community who we consider to be partners in our business,” she said.

A statement from Carnival said the company was meeting with AFTA and key travel agent partners to address concerns about plans to abolish the TCF.

“As Australia’s largest cruise operator, we are concerned about the risk to public confidence in travel agents and the broader tourism industry if an appropriate compensation mechanism is not found to replace the TCF,” Sherry said.

“Simply scrapping the TCF without a suitable replacement would leave Australian travellers who book through travel agents with limited protection,” Sherry said.

“It’s no secret the current TCF arrangement is onerous for travel agents so it’s timely to sit down and find a mechanism that addresses the current challenges and properly balances consumer risk.”


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