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Westbury: TCF figures back AFTA’s case for self-regulation


Issues & Trends – May 2011

Westbury: TCF figures back AFTA’s case for self-regulation

THE Travel Compensation Fund (TCF) annual report released earlier this month delivered good news to consumers. It showed that, at a time when outbound travel numbers are increas-ing at an exponential rate,

  • The number of travel agent collapses in 2010 was almost half the number of failures in 2009;
  • The amount that the TCF had to pay out to those affected by agency collapses was more than halved; and
  • The number of claims generated by failed travel agents in 2010 was less than a third of the figure in 2009.

AFTA chief executive Jayson Westbury immediately hailed the results as giving “strong support” to Options 1A and 2A of the consultation paper to be considered by a meeting of state and federal consumer affairs officials on June 2.

It is expected that this meeting will finalise a new travel industry consumer protection regime. Options 1A and 2A, basically envisage a self-regulatory scheme backed by Australian consumer law and the abolition of the TCF.

The TCF’s greatly reduced workload compensating consumers and acting as a watchdog over the travel agency sector of the industry can only rein-force the federation’s case, Westbury believes.

The latest figures will presumably only increase the relevance of a statistic cited by an AFTA submission last year – the average cost of processing a claim through the TCF ($4268) is greater than the value of the claim ($3095).

The TCF’s latest annual report showed 1500 travellers in Australia claimed compensation for lost money in 2010 after their travel agent collapsed – a decrease of 57 per cent from 3532 in 2009. In 2010 there were 19 agent collapses, which was down on 30 agents in 2009.

The TCF had to handle only 340 new claims last year compared to 1073 in 2009. The total amount of compensation for these agents in 2010 was $1,510,361, a 57 per cent fall on $3,534,013 paid out in 2009.

While Westbury identified continuing consolidation of the retail travel industry as a key factor in reducing claims while the TCF attributed it to improved market conditions.

TCF chief executive Glen Wells said: “The travel industry benefited from the improving international and domestic travel market in 2010.

“There was healthy sales growth in the outbound market although inbound was adversely affected by the strong Australian dollar and a slower recovery of overseas markets.

“The strong Australian dollar has driven travellers into agencies at a quicker rate than had been expected in the doldrums of 2009’s Global Financial Crisis.”

The TCF reported that only 0.3 per cent of agents failed to meet the minimum financial criteria in 2010.

“This figure sat at 2 per cent in 2004 and has dropped steadily ever since the TCF introduced new online tools to assist participants to self-calculate and manage their operational reporting,” the TCF said.

In what will be seen as an argument for retaining the TCF, Wells said: “In 2010, the TCF again successfully fulfilled its role of protecting consumers and as an effective regulatory body.

 

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