It’s now 18 months since governments across Australia swept away the former licensing regime for travel agents, along with the Travel Compensation Fund. The industry is now regulating itself, and while there’s still debate ongoing about the benefits of the new arrangements and the implementation of the AFTA Travel Accreditation Scheme, the removal of red tape has seen several innovations which would not have been possible under the former regime.
BRUCE PIPER looks at how the world has changed.
Some years ago, setting up a travel business in Australia used to be a rather expensive activity, with hefty fees payable to a range of organisations before you could even open the door. Travel agents operating in jurisdictions other than the Northern Territory required a licence, costing around $1,100 up front for a corporate registration, along with annual renewal charges of around $900. You were also required to join the Travel Compensation Fund (TCF), with a one-off cost for a new application of more than $8,000 – and again there were ongoing costs with the TCF. If you wanted to just expand your existing operation into a new location it was slightly cheaper – but still required a payment to the TCF of about $5,500 simply to register a branch.
All that has now disappeared – and for some operators this has been a breath of fresh air, allowing them to spread their wings and venture into previously unexplored areas. A case in point is NSW-based Hunter Travel Group, a Helloworld member with 12 branches across the NSW Hunter region and NSW north coast, along with five RACT Travel outlets in Tasmania. The thriving business, which took home a swag of National Travel Industry Awards last year including ‘Best Travel Agency Retail – Multi Location’, has made the most of the deregulated environment – most notably by implementing “pop-up” travel outlets inside major retailer Costco.
In June last year the agency had a presence within Costco’s Sydney flagship store in Auburn for 12 days, followed by another stint within Costco Casula. Each of the temporary helloworld travel agencies was staffed by three employees and saw thousands of shoppers exposed to the brand. Hunter Travel Group managing director Brett Dann said the pop-ups were a great success. “The customers loved the idea that Costco was interested in the travel space, and showed great interest in helloworld’s services,” he said. “We were very pleased with the high number of quotes, giveaway entries and the sales that were generated from our pop-up store”.
Not resting on his laurels, Dann flagged further plans to expand the initiative to Costco stores in the ACT, Victoria and Queensland as well – something that would have been well-nigh impossible under the TCF regime. “Deregulation has given us flexibility to work with other businesses that see travel as part of their distribution channel. We are talking to Costco on how we can improve the delivery and benefit for both parties, and we will test other methods of delivering product in the next couple of months… stay tuned,” he told travelBulletin.
Home-based agencies have also seen changes due to the new world of deregulation. Travel Counsellors, which had long held off establishing a beachhead in Western Australia because of that state’s legislative requirements, was poised to move as soon as the red tape was removed, and has expanded rapidly in the West, with ten agents now operating in the state.
Travel Counsellors gm Tracy Parkinson said the group now insists that suppliers are financially protected. She also noted a sharp increase in media coverage of failures. “It’s a shame that some Aussie travellers are being ripped off and left with their holiday dreams in tatters, so more awareness needs to be built around the importance of booking with an accredited, reputable agent. AFTA is doing a great job of this with ATAS,” she said.
TravelManagers has also changed the wayit operates in Western Australia, with the new regime allowing it to treat its Personal Travel Managers there as contractors rather than under an employment agreement, bringing WA into line with other jurisdictions.
However Barry Mayo, director of TravelManagers parent company House of Travel, says this is the only material change the company has experienced in its day to day operations. Continuing to question the benefits of the changed environment, he said TravelManagers is also now having to undertake a lot more due diligence on the financial standing of suppliers.
“In the past if a supplier was a TCF member this provided a degree of financial security that no longer exists… this increase in financial due diligence of suppliers is taking up significant time and is a hidden increased cost of doing business,” Mayo said.
Flight Centre – ever the travel industry behemoth – has strongly backed the reform of the sector. “We believe it has been a positive and important step,” Flight Centre spokesman Haydn Long told travelBulletin. “While we have not made any significantchanges, we have been able to remove some unnecessary bureaucracy and make some savings,” he said. That’s somewhat of an understatement, given that tracking through back issues of Travel Daily confirms that Flight Centre was on average opening about 100 new branches every year.
While some of those were relocations, that still amounts to more than $500,000 saved annually by Flight Centre in TCF branch application fees alone. But that’s not all – the removal of the TCF has also had a big impact on how Flight Centre and other major operators handle client monies, with previous requirements forcing them to maintain large cash balances.
Flight Centre has invested substantially in AFTA and ATAS, with all of its outlets accredited under the new scheme. Long said the new regime gives travel companies flexibility in how they can expand internationally and manage their capital. “Importantly, it also puts travel agents on a more level playing field with airlines and other general retailers,” he added. Helloworld also confirmed its strong support for ATAS, with interim ceo Jenny Macdonald saying the group “continues to work closely with our franchisees and member agents to promote the value of choosing an ATAS-accredited agent to consumers”.
However the lowering of barriers to entry hasn’t been seen as universally beneficial. Warnings of a flood of new fly-by-night agents setting up shop appear not to have materialised at this stage, but there have certainly been some home-based agents who have decided to go it alone rather than be part of a larger group.
Most in this class are top performers with an extensive client base, meaning they are able to establish their own relationships with suppliers. Previously they would have probably found it more difficult (and expensive) to run their own businesses, but the deregulated environment has seen them able to flourish on their own, with AFTA ceo Jayson Westbury estimating that there are around 20 “accredited entities” part of the ATAS program which are homebased operators. ATAS itself is also acting in some cases as a barrier to entry, with many suppliers now requiring ATAS accreditation from travel agents before dealing with them – and vice versa.
Flight Centre’s comments about a level playing field have also resonated – particularly when it comes to foreign entrants into the market. Previously overseas operators could sell travel to Australian consumers with impunity, giving them a competitive advantage when compared to local travel agents weighed down with the red tape and costs of compliance in Australian jurisdictions. Al
though it’s now still possible for consumers to purchase directly from overseas suppliers, it appears that some foreign groups have seen the benefit of being seen as part of the local industry and have become ATAS participants, with the scheme now having several Online Travel Agencies among its membership.
And although the TCF and licensing barriers to entry have been removed, we are yet to see airline tickets being sold through service stations and post offices, as some doomsayers had forecast – although that may change. As AFTA ceo Westbury points out, even though a license is no longer required, a travel agent still needs access to a GDS or consolidator as well as other suppliers – not to mention a credit card merchant facility. Westbury believes these natural checks and balances are serving to put a brake on the rise of dodgy operators. Some in the industry may recall the furore which arose some years ago when Jetstar flagged a new arrangement with Australia Post, which proposed that tickets on the low-cost carrier be made available via Post Shops across the country.
The regulations ultimately didn’t allow this to go ahead, but the proposal was probably one of the key triggers to get officials thinking about change. Some believe it could still happen, although the rapid evolution of the internet and improvements in online booking technologies mean airlines like Jetstar are now firmly focused on direct sales through their own websites.
One thing is certain – the creation of ATAS has certainly resulted in much more publicity for the benefits of booking through travel agents. Funding obtained by AFTA to set up and manage ATAS has seen significant marketing campaigns undertaken, with targeted digital, print and social media placements targeting specific demographics to influence the way they book travel. That included for the first time ever a TV advertisement touting the travel agency sector. Announced late last year, the Channel 9 Sydney promotion saw the ATAS commercial running on a range of toprating television programs including TODAY, Mornings, the Ellen De Generes Show and more. And now that the video collateral has been produced it’s likely to be shown in other jurisdictions as further funding is obtained – watch this space.
A sore point for many is the millions of dollars contributed by the industry which is still held by the Travel Compensation Fund. Yet to be finally wound up, the original terms of the TCF trust deed would see this money go to the consolidated revenue of each state. AFTA is continuing to pressure governments for at least some of this money to be used for the benefit of the industry, and it’s understood some progress is being made on this front, with further details to become available in the coming months as some hitches to the finalisation of the TCF are overcome. AFTA is likely to use any such monies received to further promote ATASaccredited agents to consumers.
The industry-led nature of ATAS, rather than having the Australian travel sector overseen by a cumbersome multi-state and territory government bureaucracy, was highlighted last month with the release of an AFTA-commissioned review of the scheme conducted by lawyer Chris Greiner. When ATAS was established it included the formal review mechanism after the first year’s operation of the scheme, which saw submissions solicited from across the industry. Greiner gathered the feedback and came up with 11 recommendations – nine of which have been formally adopted by the AFTA board. As well, the review recommended practical changes in wording for the scheme’s governance document, which will also be adopted.
Interestingly, in their response to the review AFTA’s directors noted that the ATAS scheme had been responsible for some $60,000 being returned to consumers as a result of complaints made about ATASparticipants, under the scheme’s dispute resolution procedures.
“This clearly demonstrates that the systems that are in place are available to consumers and work to get the best outcome to settle disputes,” the Board said. That, along with the fact that just two referrals were made to the AFTA Code Compliance Monitoring Committee (ACCMC) “would suggest that the current internal processes adopted by participants and the external process available to consumers and participants via ATAS have worked well”.
Although some of the recommendations from the ATAS review were not adopted – most notably a suggestion by Greiner that AFTA establish a timeline for the introduction of mandatory client trust accounts – there is no doubt that the ability to evolve ATAS in response to such feedback demonstrates the increased flexibility that self-regulation has given to the industry. The changes, according to Westbury, have helped ensure that ATAS is well-positioned for the future, “and will continue to play a critical role in helping consumers identify professional, credible and trusted travel professionals in a de-regulated environment”.