INSIDER
Illustration: michaelmucci.com
The demise of Air Australia has highlighted the failures in the system for consumer protection of travellers, with agents sharing the brunt.
AS ADMINISTRATORS continue sorting out the mess left behind by Air Australia, the travel industry is fuming that governments have still done nothing to fix consumer protection for travellers.
Australia’s consumer protection scheme for travel does not cover against the collapse of airlines and many other suppliers, leaving travellers out of pocket and travel agents in the firing line of public wrath. Australian governments have been working collaboratively on a review of the scheme, known as the Travel Compensation Fund (TCF), for several years but progress has been painstakingly slow and there is still no date for an announcement.
In the meantime, the industry is left trying to educate consumers on how the TCF works and what it does and doesn’t cover.
Travel agents say they are also putting in hours of unpaid time trying to rescue passengers who are stranded by business collapses or by rogue operators who are selling via the internet.
“We’re putting out a lot of fires for consumers,” says the veteran travel agent and chairman of Axis Travel Centre, Max Najar.
“With Air Australia, travel agents did so much after-hours work, at no cost, to help consumers [who were stranded by the airline].”
The question is: whose responsibility is it to protect travellers against the collapses that inevitably occur? Should taxpayers bear the brunt, should the industry be made to cover itself (with the scheme expanded to include airlines and all other suppliers) or is it our responsibility as consumers to protect our own investments?
Consumer Affairs Victoria, which is taking a lead on the review of consumer protection for travellers, says state ministers for consumer affairs have acknowledged the need for reform but there is no time frame for the announcement of a “transition plan”.
“Most jurisdictions agree that regulation of this important sector needs to be modernised, particularly with regard to the national Travel Compensation Fund,” says a spokeswoman for Consumer Affairs Victoria.
“Consumers’ inability to claim on the fund after the recent collapse of Air Australia revealed its limitations,” she says.
The Australian Federation of Travel Agents (AFTA) says the only solution that will work is putting the onus on consumers to protect themselves by taking out insolvency insurance at the time of booking.
The chief executive of AFTA, Jayson Westbury, says there is simply no way to cover all types of travel bookings in a global market.
About a third of travel is now booked outside the realm of the protection provided by the TCF and this will only grow.
“I think inevitably we will see the removal of the TCF,” he says. “Globally, everywhere that there has been an attempt to create schemes, they’re either broke or they don’t work. Every time a government gets their hands on these sorts of things, it’s messy, sticky, complicated. Consumers need to protect themselves as they do with every other commercial consumer product.”
Najar also argues for a consumer-pays approach. “I still cannot work out why we as travel agents or retailers have to pay millions of dollars into a travel compensation fund to protect consumers,” he says.
Najar believes consumers should be given the option to purchase protection at the time of buying their travel and those who refuse it should have to sign a disclaimer declaring that they opted out.
“If the consumer wants to protect their investment, they should be purchasing an insurance policy,” he says. “If I drive my car without insurance on the road and it [damages] something, I’m stuffed.”
However, Najar does not share AFTA’s optimism for governments adopting a buyer-beware, consumer-pays approach.
“I think they [governments] are pretty gutless most of the time,” he says. “I think they will say ‘we need to be nicey-nice to consumers’.”
AFTA’s Westbury says the other issue is doing more to prevent collapses along the lines of Air Australia.
AFTA has proposed a toughening up of the regulatory framework for start-up airlines, with more checks and balances in their first five years, when they are most likely to fail.
“CASA [the Civil Aviation Safety Authority] can ground an airline for having flat tyres but they can’t ground an airline for not having any money in the bank,” Westbury says.
Play it safe
The Australian Federation of Travel Agents says the most effective way for consumers to protect themselves is to pay by credit card, so they can reverse the transaction if they do not get what they paid for.
While many travel companies now charge a surcharge for credit card payments, the chief executive of AFTA, Jayson Westbury, says travellers should consider this “very cost effective protection”.
As well as paying by credit card, Westbury advises travellers to take out an insurance policy that covers insolvency and to check that their airline is covered. “If you can’t get insurance, don’t book,” he says.
jane@janeefraser.com.au
