IN BRIEF: News from April 2020

CHARGEBACK scheme cut

CHARGEBACK scheme cut

The AFTA Chargeback Scheme (ACS) has become an unfortunate victim of the COVID-19 crisis, with AFTA announcing it would be placed into “hibernation” from the start of this month. The scheme, which protects participating travel agents from credit card chargeback claims by clients in the event of the insolvency of a supplier, is funded by a small surcharge on transactions — and amid the coronavirus shutdowns it simply is not viable.

No new travel arrangements are protected from 1 May 2020, but all existing bookings are protected. Members are being urged to promptly submit claims for the 2019/20 protection year, with a sunset date of 31 December this year. Claims will be assessed in January 2021, and in accordance with the ACS terms and conditions may be paid out proportionally if the total exceeds the scheme’s coverage.

“These decisions have not been taken lightly, and we understand the disappointment that members must fell at this time,” said AFTA CEO Jayson Westbury.

STA Travel’s $14m MultiFLEX fine

A year-long prosecution process by the Australian Competition and Consumer Commission (ACCC) wrapped up last month, with STA Travel ordered to pay $14 million in penalties for misleading customers about its MultiFLEX pass product.

Advertising for the pass claimed those who purchased the add-on would be able to change the dates of flights booked without any fees, with the ACCC finding that in some cases clients had even been charged for changes where no airline fees had been imposed.

STA estimated it sold an average of 16,000 MultlFLEX pass products each year between 2015 and 2019, with the company admitting liability in joint submissions to the Federal Court.

Alatus corporate

Express Travel Group isn’t sitting on its hands through the COVID-19 crisis, with CEO Tom Manwaring last month inviting travel management companies (TMCs) to join a “new generation corporate membership group”. Alatus Corporate (alatus is Latin for “wings”) promises to be a collective of like-minded independent corporate agencies, leveraging Express technology to elevate their service delivery and meet the challenges of the post-COVID world.

Manwaring said the initiative was the outcome of 12 months planning, with input from the group’s existing corporate-focused members as well as agents in the NZ-based First Travel Group network. “We look to include Alatus in financial year supplier contract negotiations with and for members,” he said, adding that the group was currently looking to enlist founding members with a view to being fully operational by 1 July.

AFTA defends agents

Concerted negative mainstream media reporting incorrectly blaming travel agents for issues around COVID-19 refunds has prompted AFTA to ramp up an information campaign for journalists in Australia’s TV, print and radio newsrooms.

A full media briefing document has been circulated, titled “The Facts on Travel Agents and Refunds,” with AFTA CEO Jayson Westbury saying it was an extension of proactive work done to correct stories on a case by case basis. “All travel agents across Australia should know that AFTA is doing all that we can to hold strong on a positive media strategy,” he said.

“But we are not able to control stories that are released by some media outlets at this time,” he said, adding that AFTA had been careful not to “give oxygen to stories or outlets where there is a clear agenda to misrepresent a situation”.

Air NZ delays New York

Air New Zealand has been forced to significantly adjust its international ambitions due to the coronavirus downturn, with the carrier regretfully announcing the deferral of its planned non-stop services from Auckland to New York for at least 12 months. Originally set to debut in October this year, the postponement came along with other route cut announcements, including the cessation of NZ’s Buenos Aires flights and the accelerated closure of the airline’s London base and LAX-LHR flights.

“It’s deeply disappointing to be in this position,” said Air NZ’s Chief Networks, Strategy and Alliances Officer, Nick Judd. “Our people have worked tenaciously over the years to build these markets and excitement was growing for our non-stop New York flight. However the effects of COVID-19 continue to bite; we expect most countries to take a cautious approach to international travel in the next year and we have to be pragmatic,” he added.

NZ CEO Greg Foran has had to preside over thousands of job cuts at the airline, and warned that “the Air New Zealand which emerges from COVID-19 will be a much smaller airline and could take years to get back to its former size,” confirming current plans to be a domestic carrier, with limited international flights to keep supply lines open, “for the foreseeable future”.

FCTG raises $700m

Flight Centre Travel Group will close more than 40% of its Australian retail stores as part of radical surgery to help the company survive plummeting demand due to COVID-19. The plan was announced alongside a $700 million capital raising, with the company telling investors the changes would help it save about $1.9 billion in annual costs. Measures include the closure of the Universal Traveller brand (formerly known as Student Flights) and more than $200 million in one-off costs, the majority relating to staff redundancies.

MD Graham Turner said the coronavirus situation was “without question the most challenging period we have encountered in our 30 years of business,” warning it was inevitable that some businesses in the industry would fail. However having raised additional liquidity and reduced costs, Flight Centre was “well placed to weather a prolonged downturn…and then take advantage of the significant opportunities that will arise once conditions normalise,” Turner added.

Ensemble shutdown

US-based Ensemble Travel Group, which launched a local operation about five years ago, has announced the closure of its Sydney office. Ensemble was established here under the leadership of Trish Shepherd, but more recently had been headed up by Katy Muyt along with two other staff. The group’s New York-based chief, David Harris, cited the coronavirus downturn for the move, saying “due to the current difficulties our industry is facing globally we regretfully have had to make the difficult business decision to discontinue our operations in the market”.

Local Ensemble members had included Phil Hoffmann Travel, TravelManagers and several other CT Partners agencies.

App may speed return

The successful uptake of the Federal Government’s new COVIDSafe smartphone app could see a significant acceleration of a return to normal travel patterns, according to AFTA CEO Jayson Westbury.

While acknowledging that security and privacy issues mean adoption of the Bluetooth-based contact tracing app is a personal matter, he said “what we want for Australians is the return to normal life, and what we want for the travel industry is for people to have the freedom to travel”.


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