Bon Voyage? 12 months since the deregulation of travel agents

On 1 July 2014 the Travel Agents Act was repealed and the Travel Compensation Fund ceased to operate. As a result, Australian travel agents are no longer required to be licenced nor are they required to hold insolvency insurance for consumer protection.

Before the changes came into effect, Steven Lewis of ACA Lawyers and travel law expert wrote of his predictions for the future of the deregulated industry in Travel Weekly – Travel agents should be careful what they wish for. Steven’s article was recently referred to in a column in The Justinian commenting on developments since deregulation of the travel industry – Justinian – have a safe trip.

Below is a brief look at what has happened in the industry over the past 12 months.

Going, going, gone

Since February 2015, at least four travel agencies have collapsed. Getaway Escapes on the Gold Coast appointed a liquidator in February 2015. CTS Travel and Ace Travel in Victoria and Travel Rockhampton followed suit in May 2015. As a result of the agency collapses, many customers have found themselves without reservations and without any way to recover their money. A report in The Leader in Victoria stated that CTS Travel owes in excess of $340,000 to more than 70 creditors, many of whom had paid the agency for accommodation and flights, only to discover that the money had not been passed on.

As the Queensland Office of Fair Trading Executive Director Brian Bauer observed, “Often when this type of business goes into liquidation, some customers believe they have booked and paid for travel, but find those arrangements have not been processed through to the travel and accommodation providers.”

Industry sources estimate that there have been more agency failures since deregulation resulting in a loss of clients’ money. The problem is, with the abolition of the TCF, there is no longer a central data source to inform both the public and the travel industry.

What about insurance?

In place of the statutory regulation is a new voluntary accreditation scheme supervised by the Australia Federation of Travel Agents (AFTA) known as ATAS. While ATAS accreditation is not compulsory, accredited agents will have access to a range of insurance products to protect against loss as a result of travel agency insolvency. That said, AFTA has no authority to enforce standards against agents that aren’t accredited and under the voluntary scheme there is no requirement for agents to have insolvency insurance to protect consumers.

The insurance products endorsed by ATAS have proved to be expensive and the take up by travel agencies has been minimal.

What about travel insurance?

Travel insurance won’t help you.  While some policies do cover travellers for the insolvency of travel service providers such as airlines, hotels and tour operators, there is currently no travel insurance policy in Australia that covers consumers for the collapse of a travel agent.

Protect yourself

The two best ways to protect your holiday and your money when booking through an agent are:

•  Pay with your credit card.  Yes, it might add 1% or 2% to the total, but that will be money well spent if you need to ask your bank for a credit card chargeback.  Be mindful that there are time limits on making a claim so act as soon as possible.
• Ask your travel agent whether they have insurance to protect you from their insolvency.  If they don’t, book through someone else.

If you have a travel or aviation related problem and need legal assistance please contact:

Steven Lewis, Principal
E: steven.lewis@acalawyers.com.au

Monica Allen, Senior Associate
E: monica.allen@acalawyers.com.au