australian federation of travel agents (afta) – · pdf fileaustralian federation of...

Review of consumer protection measures in the

travel and travel related services market in Australia

including the role of the Travel Compensation Fund

Submission byAustralian Federation of Travel Agents

April 2010

Without a travel agent,you are on your own

Contact

Mr Jayson Westbury

Chief Executive Officer, AFTA

309 Pitt Street

Sydney NSW 2000

T: 02 9287 9900

E: [email protected]

AFTA submission to Ministerial Council on Consumer Affairs Review of consumer protection measures in the travel and travel-related services market




Who is AFTA? The Australian Federation of Travel Agents Ltd (AFTA) was founded in 1957 to:

establish professional standards for travel agents;

stimulate, encourage and promote travel;

bring together those acting as intermediaries in the distribution of travel services; and

build strong working relationships with suppliers and consumers of travel related services.

AFTA represents approximately 70% of Australia’s travel intermediaries that control more than

90% of travel intermediary turnover. It also has a substantial base of associate members,

representing non-intermediary sectors of the travel related services industry. Members are

bound by AFTA’s Code of Ethics.

AFTA represents the interests of its members on many local and international bodies, including

peak bodies of other national intermediary associations.

AFTA also contributes significantly to the Australian domestic tourism industry by a strong

involvement in the National Tourism Alliance, along with many other working parties and

committees.



TABLE OF CONTENTS

Chapter Page

Who is AFTA 3

List of Graphics 6

List of Abbreviations 7

Executive Summary 9

1 Overview of the travel services market in Australia 11

2 Outline of the current regulatory scheme 17

3 Need for consumer protection in the travel and travel-related services market

27

4 The need for reform 31

5 Options for reform 41

6 AFTA reform proposals 47

7 Summary of responses to Issues Paper questions 61

Bibliography 67

Attachments 68-69


including the role of the Travel Compensation Fund List of Graphics

Page

Graphic 1 Basic travel services supply chain 12

Graphic 2 Summary of TCF claims paid and recoupments 21

Graphic 3 Credit card payment in most circumstances goes direct to airline

26

Graphic 4 The TCF protects less than half of Australian air travellers

34

Graphic 5 The TCF is an inefficient way to process claims 36

Graphic 6 The TCF represents excessive regulation of a stable industry

37

Graphic 7 Guarantees held by TCF and TCF net assets, 2004-2008 38

Graphic 8 Timeframe for AFTA proposal for reform of consumer protection

48

Graphic 9 AFTA proposed short-term model for consumer protection

50

Graphic 10 AFTA proposed long-term model for consumer protection

57

Attachment 1 AFTA Policy Option Reform Map – general view 68

Attachment 2 AFTA Policy Option Reform Map – AFTA’s reform proposals mapped

69


including the role of the Travel Compensation Fund List of Abbreviations

ABS Australian Bureau of Statistics

AFR Annual Financial Review

AFTA Australian Federation of Travel Agents

ATOL Air Travel Organisers’ Licence Scheme

CIE Centre for International Economics

COAG Council of Australian Governments

FOS Financial Ombudsman Service

IATA International Air Transport Association

MCCA Ministerial Council for Consumer Affairs

NLS National Licensing System for Occupations

NTLB National Travel Industry Licensing Board (proposed)

NTLS National Travel Industry Licensing System (proposed)

OBPR Office of Best Practice Regulation

RBA Reserve Bank of Australia

TAANZ Travel Agents’ Association of New Zealand

TCF Travel Compensation Fund

TPA Trade Practices Act

TQCA Tourism Quality Council of Australia

TSP Travel Services Provider



Executive Summary

This review is appropriate as regulatory reform is long overdue

AFTA welcomes this review of consumer protection measures in the travel and travel-related services market as it presents an overdue opportunity to reform the outdated regulatory regime and to implement a new regime that is appropriate for a modern travel industry. AFTA members, and travel intermediaries generally, play a major role in the Australian economy by professionally and efficiently facilitating arrangements for business and leisure travellers. They provide an integral link between the travelling public and the diverse range of travel suppliers. The travel services industry makes a significant economic contribution to the Australian economy. In 2007-08, travel agents and tour operators accounted for over $2.5 billion in tourism consumption (excluding payments to suppliers and wholesalers), representing 5% of tourism characteristic products in the economy. Nearly 23,000 Australians are employed by travel agents and tour operators (ABS 2009a). The travel and travel-related services sector is a large and dynamic industry. However, it has suffered for many years from a regulatory system which is outdated and fails to acknowledge the modern realities of the operating environment. The current regime was implemented in 1986 and has not been fundamentally reformed in that 24 years. Reform is long overdue.

Supplier innovation, financial innovation and structural change means that the current regulatory scheme is inappropriate, inefficient and inequitable

Innovations in the travel services market combined with a high level of financial and structural change have radically altered the industry’s environment. In approaching its assessment as to what is the appropriate model of regulation, AFTA has been guided by the following principle and objective:

To achieve a fair market environment for the consumer and travel services provider where the consumer is provided the same guarantee of service level and opportunity for protection from loss irrespective of the sales channel used to purchase travel services.

AFTA recommends significant reform of the regulatory regime with a staged move to self-regulation, following a period of co-regulation

In this submission, AFTA recommends significant reform for the regulatory regime to accommodate the modern industry into the future. AFTA’s long-term reform proposal represents a shift from the current high level of government intervention, to an appropriately lower level of regulation centred on self-regulation. In recognition of this large shift, AFTA has recommended a short-term ‘interim’ reform stage, whereby there is a transitional, co-regulatory approach to industry regulation. AFTA believes that the nature of the industry and the conclusions of previous reviews strongly support a move in this direction.

The TCF is not an appropriate feature of the regulatory regime in the short or long-term

A key part of AFTA’s reform proposal in both the short and long-term involves the removal of the Travel Compensation Fund (TCF). While AFTA acknowledges that the TCF served a purpose in the past, it is no longer an efficient, equitable and sustainable mechanism to address consumer protection. Its dramatically reduced application, high compliance cost and inefficiency dictate that it be removed and replaced with a more equitable mode of compensation through private travel insurance. In this submission, AFTA has outlined a series of principles for the short and long-term models which frame the structure of AFTA’s reform. Some aspects of the structure will require more development to flesh out detail of the proposals. We look forward to working with Government, industry participants and other stakeholders to fully develop a modern regime that is appropriate for the travel services industry today and into the future.



1 Overview of the travel services market in Australia

1.1 The contribution of travel intermediaries and the travel and

travel-related services market

Travel agents play a unique and integral value added role in the travel services sector

Important role of travel intermediaries Each year Australians make over 72 million overnight domestic trips and more than 5.6 million international trips (ABS 2009a, p 23). Travel intermediaries play a crucial and integral role in facilitating this travel, and thereby make a valuable economic and social contribution to Australia. Travel plays an important part in the life of many Australians. For some, it can have the same personal and emotional value as the purchase of a major durable item such as a motor vehicle or an item of furniture. Travel intermediaries provide a valuable service to both leisure and business travelers through: • Provision of travel advice by skilled and experienced professionals; • Making arrangements for personal or business travel tailored to the

customer’s need, including for transport, accommodation, packaged tours and many other facets of a fulfilling travel experience;

• Provision of valuable ‘after sales service’ as a professional who can address questions and problems as a consumer undertakes his/her travel experience;

• Facilitation of payments to suppliers; and • Facilitating the purchase of appropriate travel insurance. Travel agents also play an important role in destination and product marketing, through shop-front or online marketing and word-of-mouth promotion in-store. This is a role that benefits both the consumer (through provision of a ‘value add’ that they could not otherwise receive) and the supplier (by gaining extra exposure for his product).

Travel agents make a significant contribution to Australia’s economic activity and employ over 20,000 people

Contribution of travel intermediaries to the Australian economy In conjunction with tour operators, in 2007-08, travel intermediaries provided $2.5 billion in travel goods and services to consumers (“tourism consumption”), including provision of booking services and sales of travel insurance (but not including payment for tickets etc, which are passed on to the supplier or wholesaler) (ABS 2009a, p 16). In total, the services provided by travel agents and tour operators account for 5% of “tourism characteristic products”, and 3% of the total consumption by travelers. In 2008, 4,844 travel agents operated in Australia, consisting of 3,182 head offices and 1,662 branches (TCF 2009, p13). Of the nearly half a million people employed in, or as a consequence of, the tourism sector, 23,000 or approximately 5% are employed by travel agents and tour operators. (ABS 2009a, p 23).


including the role of the Travel Compensation Fund 1.2 The structure and role of travel intermediaries in the travel and

travel related services market

Travel services are provided to consumers through a complex multinational distribution system

Travel services are supplied to the consumer via a complex distribution system comprising many different and layered entities, which may be domestic or overseas. These distribution channels are supported by a similarly complex web of processes and systems. Graphic 1 below demonstrates this complex system and illustrates how consumers may purchase goods and services directly from a supplier, or may purchase through an intermediary that acts as an agent for the supplier. Graphic 1: Basic travel services supply chain

A further layer of complexity is added to the distribution system when entities undertake one or more of the roles of supplier and intermediary both in Australia or overseas. For example, an airline may sell directly to a consumer or may act as an intermediary, packaging an airfare with accommodation, other transport arrangements (e.g. hotel transfers) and experience-related arrangements (e.g. show/attraction tickets or meals). The supply chain may also include more than the two steps illustrated in the graphic. For example, if the airline package described above was sold through a travel agent it would result in a second intermediary stage. Suppliers Suppliers, as the term implies, are those entities which actually provide a travel service to the consumer - such as airlines, cruise companies, bus and rail operators and accommodation providers. For the purposes of this submission, suppliers are interpreted as providers of travel services.


including the role of the Travel Compensation Fund Airlines are the major suppliers of travel services. Suppliers generally are not subject to the current regulatory regime for travel agents

Airlines Airlines are the major suppliers of travel services. Most carriers are members of the International Air Transport Association (IATA). IATA serves many roles, including acting as a clearing house for transactions between its members, and through intermediaries, with consumers. IATA also operates an accreditation system for intermediaries which amongst other things provides that members will honor air travel against tickets issued by other accredited members. Other suppliers The make up of the rest of the supplier sector could best be described as diverse. Other suppliers include cruise, rail and car rental companies, accommodation providers, and other ground operators such as tourist attractions. Another dimension to these suppliers is their scale of operation. An accommodation provider could be a small country bed and breakfast operator, through to a major, internationally affiliated 5-star hotel. A common theme of relevance in this submission is that many suppliers are not required to be licensed as “travel agents” and be members of the Travel Compensation Fund (TCF), like the bulk of intermediaries are. This results in regulatory inequity, with most intermediaries facing the burden of regulation, while suppliers, who often compete with intermediaries, do not.

Intermediaries are a diverse range of businesses and number approximately 5000 nationally

Intermediaries Intermediaries are all those entities in the supply chain for travel services that contract with a consumer to facilitate a service but do not provide the end service. Intermediaries include: • retail and corporate travel agents; • consolidators; • tour wholesalers; and • inbound tour operators. The major activity undertaken by intermediaries in income terms is the procurement and provision of international travel arrangements. Australia has a relatively large intermediary sector, with between 4,500 and 5,000 licensed intermediary locations. Over half of licensed intermediaries are retail travel agents, and the bulk of these are involved in retail leisure business (TCF 2009, p 15). In 2008, nearly 70% of these businesses had turnover of less than $5 million, while approximately 26% had turnover less than $1 million. In this submission, AFTA includes intermediaries in the category of “travel-related services”, along with other providers such as insurance companies More information on the travel services distribution system and the role of the different intermediaries in the sector can be found in the AFTA paper Better Regulating Travel Related Services (AFTA 2005) (available upon request).


including the role of the Travel Compensation Fund 1.3 Historical changes in the travel and travel related services

market

Changes to the purchasing patterns by travellers have dramatically altered the travel and travel-related services environment in the past two decades

Impacts of technology use by consumer The emergence of the internet and other digital technologies have bridged the gap between suppliers and consumers, previously singularly, or primarily, facilitated by travel intermediaries. Between 1998 to 2009, household access to the internet at home has more than quadrupled from 16% to 72%, while access to computers has increased from 44% to 78% (ABS 2009b, p 1). Internet use has established opportunities for suppliers to market their products directly to consumers. This has often been promoted via internet- only marketing campaigns, some of which are loss-leader promotions (such as ultra low-cost airfares) that are not available through traditional distribution channels. Evolution of payment technologies Familiarity with online experiences has contributed to the wide-spread acceptance of internet purchasing. The ABS estimates that 64% of all Australians 15 years or over who accessed the internet in 2008-09 used the internet to purchase goods or services (ABS 2009b, p 30). Another factor is the acceptance of internet purchasing as the development of faster online payment mechanisms using credit cards and more recently scheme debit cards are becoming more prevalent and accepted. Growth in electronic payments has also impacted on the terms and conditions of trade for some intermediaries. In the case of payments by credit card, facilities now exist whereby payments by the consumer through an intermediary can be passed directly to a third party principal supplier (eg airline) or other intermediary (eg ticket consolidator). These innovations in payment mechanisms have had a huge impact on the way the travel intermediary market functions – and the relevance of the regulatory system. A prime example is the credit card transaction mentioned above – the passage of a transaction straight to the principal means that funds are not ‘at risk’ with the intermediary – removing the necessity for the Travel Compensation Fund (TCF) protection guarantee in respect of the travel agent. Competitive pressures In the quest to improve yields, suppliers are increasingly taking products direct to the market, a practice which is being willingly accepted by consumers. Competitive pressures and the demand for personal service will ensure that intermediaries remain in the market, but the pressure on yield and the acceptance of direct supplier-consumer transactions will continue to alter the structure, size and role of the intermediary sector.


including the role of the Travel Compensation Fund The travel intermediary sector has consolidated into fewer, larger and more franchised operators

Changes in the composition of the travel intermediary market Modern technology and other short and long-term factors have lead to changes to the composition of the travel intermediary market. Most evident has been the consolidation of the industry. Generally, numbers of single brand/premise businesses have declined while the number of franchise and company owned stores has increased. This trend is in part caused by lower commission paid to intermediaries as direct sales on the internet encourages suppliers to justify lower commissions to intermediaries. Other factors that have led to the concentration of business in larger and franchised operations have included the cost of technology investments necessary to set up and maintain a sophisticated online presence, and the onerous capital requirements imposed by the TCF, IATA and some consolidators. The internet has also introduced additional competition in the Australian market from unlicensed intermediaries, both off-shore and domestic providers who are not required to be licensed as travel agents due to limitations with the definition of a travel agency business. Conclusion Further changes to the travel intermediary market are inevitable as technology improves. Greater on-line service and service quality is constantly being made available to the consumer, and financial markets and products continue innovate and evolve, while more sophisticated online service offerings are developed. The industry must position itself to take advantage of the future opportunities these changes will offer, and not be held back by an outdated regulatory system.



2 Outline of the current regulatory scheme

2.1 Co-operative scheme for the uniform regulation of travel agents

There are two key components to the Co-operative Scheme for Travel Agents: 1. Licensing, and 2. Travel Compensation Fund

The current regulatory scheme for travel agents was initiated in 1986 by four states, New South Wales, Victoria, Western Australia and South Australia (‘the original participants’). While NSW had a statutory body in place from 1974 to administer a licensing and compensation scheme1, it was not until the early 1980s that calls were made for a national regulatory scheme. In response to calls for a national system, the original participants signed a ‘Participation Agreement’ to establish a ‘Co-operative Scheme’ for the uniform regulation of travel agents. The agreement, signed in September 1986, provided for two key components to the Co-operative scheme2: • The introduction of state legislation to mandate licensing, with the

following minimum requirements: ⇒ Licensing of every person carrying on a business as a travel agent; ⇒ That all licensees meet certain probity requirements; ⇒ That all licensees be members of a ‘Travel Compensation Fund’; ⇒ That a licensee’s licence be suspended if its participation in the fund is

terminated; ⇒ That principals and managers of licensed agents have certain

prescribed qualifications and experience; and ⇒ Disciplinary measures if licensing conditions were breached.

• Establishment of a fund, to be known as the ‘Travel Compensation Fund’,

for the purpose of compensating travellers suffering loss in respect of travel arrangements made by a travel agent.

The reality of the Co-operative Scheme is that state based licensing and TCF membership of/for travel agents are mutually dependent – meaning compulsory membership of the TCF to conduct business as a travel agent. Today, all states and territories, except the Northern Territory, are participants in the Co-operative Scheme with Travel Agents Acts in place in each state and the ACT.

2.2 Licensing

Any person who “carries on business as a travel agent” must be licensed3 to do so. Accordingly, licensing requirements are dictated by the functional activities of a person4.

1 The Travel Agents Registration Board established under the Travel Agents Act (NSW) 1974. 2 See the Schedule to The Participation Agreement 3 Travel Agents Act 1986 (NSW), s. 6 4 For ease of reference, note that any references to a Travel Agents Act will be references to the Travel Agents Act 1986 (NSW).



A person carries on business as a travel agent if the person: • Sells tickets for travel on a conveyance to another person; or • Sells rights of passage to, and accommodation, at a place 5. This test applies to activities whether or not they are incidental to any other business that the person carries on.

Airlines and accommodation booking agencies are outside the scope of the travel agent regulatory scheme

Limited definition The definition is limited as it includes only ticket sales for travel on a conveyance (eg plane, train, bus) or if tickets are sold which include passage on a conveyance and accommodation. This limited coverage therefore excludes operations such as accommodation booking agencies (on line or otherwise). Furthermore, if the person owns the conveyance, they are deemed not to be carrying on a business as a travel agent6. AFTA notes that this exclusion results in airlines, the major provider of travel services in Australia, not being within the scope of the national regulatory scheme.

Outdated legislative definitions results in poor outcomes for consumers and business

Licensing regime weakened and problems magnified These two limitations on the definition of travel agent severely undermine the operation of the regime. This weakness has been magnified by the increasing growth of on-line operators and the ability of travellers to purchase airline tickets direct from airlines over the internet. These weaknesses expose the following regulatory flaws: 1. Uncertain protection for consumers: Consumers will not always gain the protection of the TCF and of dealing with regulated participants, depending upon how they purchased; and 2. Lack of fair competition: Licensed agents are at a competitive disadvantage because they suffer the compliance costs of the regulatory regime that others who fall outside it do not. These are poor outcomes for both consumers and business. This will be further explored in Chapter 5 of this Submission. Licensing requirements The various state Travel Agent Acts prescribe the requirements for licensing. A summary of the main tests are as follows:

Applicant criteria7 • An applicant must be aged 18 years and over; • An applicant must not have previously been disqualified from holding a

licence in the applicant state or in any other state; and

5 Travel Agents Act 1986 (NSW), s. 4(1) 6 Travel Agents Act 1986 (NSW), s. 4(3) 7 Travel Agents Act 1986 (NSW), s. 10(2)



• An applicant, or a person proposed to be employed as a supervisor, is a fit and proper person and likely to carry on business honestly and fairly.

Prescribed qualifications8 A licensee must ensure that at each place of business for which the license is granted, there is a supervisor who has prescribed qualifications. In NSW, the qualifications include a certain unit of competency undertaken with a registered training organisation and one years experience in the past 5 selling international travel tickets or in supervising a licensed premise in another state9. Membership of TCF10 As outlined above, to hold a licence, an agent must at all times be a member of the TCF. Accordingly, ongoing membership of the TCF is mandatory to operate as a travel agent. Disqualification from the TCF will result in inability to carry on business as a travel agent.

2.3 Travel Compensation Fund

Travel agents must be members of the TCF to operate as a travel agent

Licensing and TCF membership interdependent The Participation Agreement requires that to be a licensed travel agent, the agent must be a participant in the TCF. This requirement is incorporated in the relevant State Acts11. TCF structure and governance The TCF was established by a Deed of Trust by the original participants in 1986. The TCF is managed by a Board of Trustees. The Board is constituted of: • A chairperson; • Two trustees with knowledge of the interests of consumers; • Three trustees with knowledge of the travel industry; and • Three trustees representing the Ministerial Council. The Trust Deed gives the Trustees a deal of discretion in management of the Trust, but the operations are ultimately governed by the Deed of Trust, State legislation and the Ministerial Council for Consumer Affairs (MCCA). Purpose of TCF The TCF serves two roles: • Compensation: To provide compensation to certain people who deal

with travel agents; and

8 Travel Agents Act 1986 (NSW), s. 36 9 Travel Agents Regulations 2006 (NSW), reg 12 10 Travel Agents Act 1986 (NSW), s. 11 11 Eg Travel Agents Act 1986 (NSW), s. 11(2)



• Prudential oversight: To ensure that only travel agents with adequate financial resources are participants of the TCF (and thereby able to operate as travel agents)12.

Compensation payments by the TCF are relatively insignificant compared to the value of the entire industry … … and is a costly way to compensate consumers

TCF compensation role From a consumer’s perspective, the main role fulfilled by the TCF is that of compensation for consumers who suffer loss arising from the “failure to account” by a travel agent13. That is, monies received from the customer have not been passed on by the agent to the supplier of the travel services. Compensation can only be paid if the loss is not protected by an insurance policy. The Board also has discretion to pay compensation in respect of losses incurred through intermediaries who are not members for the TCF14. We note that does sometimes occur. In the last 5 years, analysis has demonstrated that on average: • 800 claims per year are paid out; and • Paid claims on average amount to $2.1 million per year (PWC 2010, p 14). AFTA concludes that this is a relatively small number of claims of relatively insignificant amount when compared to the number of domestic and international trips by Australians and the estimated value of the travel services sector of $28 billion (ABS 2009a). AFTA concludes that the TCF is a costly and inefficient mechanism to perform a compensation role that involves a relatively small amount of compensation. Further discussion on this point is outlined in Chapter 4 of this submission. Compensation recoupment by TCF The TCF will often recoup compensation payments through action against the travel agent, its auditor or administrator. The TCF has demonstrated ongoing success at recovering significant proportions of claims paid, often recouping more than half the value of claims paid out in a year, albeit often at a significant legal cost. Recoupment can occur through various mechanisms, including: • Legal action against the travel agent, its administrators or auditors; and • Calls on guarantees provided by the agent.

Recent claim and recoupment history Graphic 2 summarises claims paid out by the TCF and recoupments made (sourced from TCF Annual Reports).

12 Travel Compensation Fund, Deed of Trust, Cl. 3 13 Ibid, Cl. 15.1 14 Ibid, Cl. 15.2



Graphic 2: Summary of TCF claims paid and recoupments

2008 2007 2006 2005 2004 Claims paid 2,049,019 4,060,490 920,921 483,130 1,829,549Recoupments 1,077,028 2,112,049 332,438 475,490 394,860Net for year 971,991 1,948,441 588,483 7,640 1,434,689

Source: TCF Annual Reports AFTA observes the following: • The gross value of claims paid is not, on average, of high value given the

total expenditure on travel in the economy (estimated by the ABS at over $28b – ABS 2009); and

• Recoupment of monies can represent a significant percentage of the gross value of claims paid out.

TCF Funding Typically, over 50% of annual revenues of the TCF are drawn from the travel agent participants through contribution and renewal fees. Accordingly, TCF members bear the majority of the funding burden of the TCF. Interest is typically the next biggest contributor to revenue after member fees (24% of total revenue in 2008). Other sources of revenue include: • Recoveries from participants and auditors; • Recoveries from legal fees; and • Recoveries from guarantees. TCF operating cost The cost of running the TCF in 2008, net of claims paid, was $2,824,425 (TCF 2009, p 25). The main cost components were: • Salary costs (46%); • Legal costs (20%); • Consultancy costs (9%); and • Rent (7%). AFTA concludes that this is a costly and inefficient manner to administer gross claims of $2-$3 million, and net claims of much less than this. This will be explored further in Chapter 5 of this submission.

TCF prudential oversight is concentrated on the financial security of agents, and imposes the requirement of a bank guarantee on nearly 1 out of 5 participants

TCF Prudential Oversight Role The second key role undertaken by the TCF is to ensure that travel agents have adequate financial resources. Clause 9 of the TCF Trust Deed, and guidelines developed under that Clause, outline the requirements that must be satisfied to demonstrate participant eligibility. While there are a number of criteria relating to agent experience, business acumen, and experience, the key criteria is financial security.



Financial Criteria

The TCF has developed guidelines to determine financial viability (TCF 2006). The initial requirement is that participants must maintain a minimum level of equity dependent upon their annual turnover (TCF 2006, p 2). In addition to the minimum capital requirements, the TCF conducts a review of a participant’s annual financial statements to determine adherence to certain financial ratios. The guidelines operate on a scoring system, with points allocated according to three tests: • Maintenance of a Trust Account; • Ratio of working capital to average monthly overheads; and • Ratio of net tangible assets to turnover. To assess an agent’s compliance with the guidelines, the TCF requires each member to lodge audited financial statements and an Annual Financial Review (AFR). Bank or approved insurance guarantees Participants who do not meet the TCF financial criteria outlined above are able to remedy their deficiency by providing a bank or insurance guarantee equal to 150% of client deposits (TCF 2006, p 5). At 31 December 2008, the TCF held securities lodged by 855 participants totalling $102,399,913 (TCF 2009, p25). This means that 18% of all participating travel agents were forced to provide guarantees.

2.4 Generic consumer protection – Commonwealth and State Fair Trading provisions

Australian travellers are afforded generic protection against unscrupulous operators in Federal and State trade practices legislation

Australian consumers of travel services are afforded generic consumer protection applicable to all industries under the Commonwealth’s Trade Practices Act and the state based Fair Trading Acts. The Commonwealth and State Territory Governments provide generic consumer protection under consumer protection provisions embedded in the Trade Practices Act 1974 (Cth) and the various state/territory Fair Trading Acts. Trade Practices Act 1974 (TPA) Part V of the TPA contains a general prohibition and a range of more specific prohibitions against certain unscrupulous behaviour. Key prohibitions include: • Prohibition on false or misleading representations as to future matters

(Section 51A); • General prohibition on misleading or deceptive conduct (Section 52); • Prohibitions on false or misleading representations as to goods or services,

including matters such as price, their performance characteristics, uses or benefits, place of origin, or the need someone may have for them (section 53);



• Prohibition on ‘bait’ advertising (Section 56) and accepting payment without intending to supply (section 58);

• Prohibition on use of physical force, coercion or undue harassment for the supply of goods or services (section 60).

Part IVA of the TPA provides protection against unconscionable conduct. This part of the TPA outlines (sections 51AA and 51AB), amongst other things, a series of tests to be considered in determining if a contravention has occurred. An example includes whether a consumer could understand documents relating to a transaction. Fair Trading Acts The Fair Trading Acts in the States and Territories broadly mirror the consumer protection provisions of the TPA. As the TPA is limited by Australia’s constitution and therefore generally applies to corporations and enterprises trading across state borders, the state acts extend the operation of the consumer protection provisions to all businesses in Australia (PWC 2010, p 20). Examples of conduct prohibited by these Acts include: • Misleading or deceptive conduct; • Unconscionable conduct; • False or misleading representations; • Harassment and coercion; • Bait advertising; and • Accepting payment without intending or being able to supply (PWC 2010,

p 21).

2.5 Travel Insurance

Travel insurance is widely available in Australia, is cost competitive and extends to cover supplier insolvency

Coverage of travel insurance Travel insurance is a product which covers policyholders (travellers) for ‘insurable events’ that occur before or during travel. These events can include trip cancellation/interruption, medical expenses and baggage loss. The Australian Government, through the Department of Foreign Affairs and Trade’s ‘Smartraveller’ website, strongly advises all Australians travelling overseas to take out travel insurance. The website makes the sharp observation:

“If you can’t afford travel insurance, you can’t afford to travel”. There is a wide variety of travel insurance product on offer, extending from basic to comprehensive cover. Basic cover tends to include limited coverage on medical expenses, cancellation costs and lost luggage. More comprehensive policies provide higher or unlimited cover for these items, as well as offering coverage for travel services provider insolvency. Travel services provider insurance As indicated above, comprehensive insurance policies offer travel services provider insolvency insurance. It is important to note that this aspect of the policy covers providers who are



suppliers of services (eg airlines, hotels, bus and rail companies) and not intermediaries (agents). We believe this is because the TCF compensation facility is available. It is difficult to determine the marginal or incremental cost of travel services provider insolvency cover because this component is bundled with a range of other components of a policy. An examination of one company’s products indicated that a policy that offers insolvency protection could cost between 10% and 60% more than one which does not provide this cover. Availability of travel insurance Travel insurance is readily accessible in Australia. Most travel agents can facilitate access to travel insurances. As well as being offered by many general insurance companies (such as QBE and AAMI), there are also a number of specialist operators (such as Covermore). In addition, there are many web-based search/comparison engines that can generate quotes and comparisons on alternative polices. Travel insurance coverage is also often extended through credit card programs and other travel companies. In addition, annual policies can also be taken out for frequent travellers.

Comprehensive travel insurances including supplier insolvency cover is taken out by the majority of international travellers

Take up of travel insurance There is general consensus that travel insurance is taken out by the majority of overseas travellers. The Issues Paper indicates that between 60%-70% of overseas travellers take out travel insurance (PWC 2010, p 17). Inquiries made of one of AFTA’s larger members indicates that 95% of international travellers take out policies that offer travel services provider insolvency cover. Accordingly, 58% of international travellers have travel services insolvency cover (ie 60% of international travellers taking out insurance x 95% of policies having insolvency cover). These statistics demonstrate a high voluntary willingness to take out a comprehensive level of travel insurance protection for high value travel. This extent of take up has been achieved without a high level of targeted marketing.

2.5 Credit/Debit card chargeback

Most travel services are paid for by credit or debit cards

Use of credit and debit cards Credit cards have over recent decades increased their prevalence as a means of payment. Benefits offered in terms of deferred payment, and convenient and secure access to funds has seen increased use of credit cards. The convenience and security factor also have led to increasing popularity of debit cards which can work off of a credit card provider like Visa or Mastercard, but access funds from a cash account rather than a deferred payment mechanism. The Reserve Bank of Australia (RBA) is reporting an increasing growth trend in debit card usage in terms of total non-cash payments (RBA 2009a). A recent RBA report shows that use of credit and debit cards continues to



grow in both number and value (RBA 2009b). In an analysis of non-cash retail payments for 2008-09, credit card transactions grew by 3.8% in number and 4.8% in value, while debit cards showed growth of 5.8% and 2.8% respectively (RBA 2009b, p7). Credit/debit card usage combined accounted for 47% of total non-cash transactions and 51% in terms of value (RBA 2009b, p 7). The RBA indicated that there is not time-series data on usage of cash, and hence no analysis of cash versus non-cash usage (other than the survey mentioned above). Survey and anecdotal evidence suggests a high level of usage of credit cards in the travel industry. The RBA estimates that credit cards account for 42% of payments in the sector, with debit cards accounting for a further 20% (RBA 2009a, p 13). Accordingly, by far the majority of travel services transactions in Australia are conducted by credit/debit cards. RBA modelling of credit card usage In 2007, the RBA took results from actual credit card usage and modelled the likelihood of a certain payment method for different transaction circumstances (RBA 2009a). The study found that the type of merchant had a significant effect on the probability of credit card use. The results showed that a consumer has a 70% likelihood of using a credit card when dealing with a holiday/travel merchant. This was easily the highest probability of usage by merchant type, with the next highest being health and medical merchants at just over 50% (RBA 2009a, p 31). These results reinforce the importance and significance of credit card usages in the travel sector and why credit card usage remains an important element in industry dynamics.

The credit card chargeback facility provides an easily accessible safety net for consumers in the event of agent and supplier insolvency

Chargeback facility A common security feature of credit and debit cards is access to chargeback. Chargeback refers to a circumstance by which consumers can request their financial institution to reverse a transaction back to the seller where the goods/services are not supplied, are defective or unauthorised. The existence of chargeback therefore reduces the risk to consumers of loss due to travel agent insolvency, and provides an extra layer of protection on top of the TCF and travel insurance. With payment for travel services estimated to be as high 62%, there is a very high level of protection to travellers offered through the chargeback facility. For travellers who make payment on a credit card, chargeback can be their ‘first port of call’ for reimbursement in the event of failure to provide a service. The TCF states that it will usually not pay a claim for a credit card payment unless the claimant can show that a chargeback application was made and declined. Travel agent use of airline merchant facility The existence and use of chargeback is more significant given the common practice in the travel industry where airline tickets are sold by travel agents on the airline’s credit card merchant facility and not the travel agent’s. This



effectively takes the travel agent out of the transaction and therefore the question of passing on of monies is irrelevant. Should the agent become insolvent is irrelevant to the traveller in terms of the ability to take the flight booked. The extent of this practice is estimated by some intermediaries at up to 65% of all tickets sold in Australia. The significance of this practice in a consumer protection context is that there is a much reduced risk exposure to the traveller should the travel agent fail. Graphic 3 below illustrates the operation of chargeback and highlights how the travel agent is not a party to a transaction with most airline ticket sales where the agent uses the airline’s merchant facility. Graphic 3: Credit card payment in most circumstances goes direct to airline


including the role of the Travel Compensation Fund 3 Need for consumer protection in the travel and

travel-related services market

3.1 The boundaries of consumer protection in travel and travel- related services

The need for consumer protection in the travel services market arises due to market failure

Why consumer protection? Microeconomic theory assumes that voluntary exchanges in unrestricted, competitive markets will lead to efficient and fair outcomes (CIE 2000, p 26). But for certain transactions, this theory does not hold and there is said to be “market failure”. This chapter of the submission examines the issue of market failure in travel agent-consumer interactions and why there is call for specific consumer protection measures in the industry. General consumer protection Consumer protection measures, both regulatory and non-regulatory, are intended to promote better outcomes for consumers by: • Protecting from unfair or unjust conduct or unsafe/defective goods; • Providing assistance when loss is suffered; and • Assisting in making better purchasing decisions (PWC 2010, p 4). Consumer protection measures can include regulatory (eg Government legislation) and non-government measures, including self-regulatory and co-regulatory regimes (eg codes of conduct, accreditation schemes). Consumer protection can include generic and industry-specific measures. Generic consumer protection measures include consumer protection provisions in the Commonwealth Trade Practices Act 1974 and the respective state Fair Trading Acts. These are detailed further in Chapter 2 above. In the travel intermediary sector, industry-specific regulation has developed to cater to two particular aspects of a consumer’s dealings with the industry. These two aspects are referred to by AFTA as the two dimensions of consumer protection in the travel intermediary industry.

AFTA examines the scope of consumer protection in travel services against two dimensions – - licensing; and - consumer compensation

“Two dimensions” of consumer protection in the travel intermediary industry Protection of consumers is a broad concept. In the context of travel and travel-related services it can be refined to securing and protecting rights to: • An acceptable quality of service at a fair price; and • Avoiding economic loss, given the nature of the industry in the way that it

operates on prepayments (AFTA 2005, p 18). As a result, travel agent specific consumer protection has developed to prescribe and enforce what AFTA refers to as the “two dimensions of consumer protection”: • Licensing: which seeks to guarantee probity and adequate service; and



• Compensation: existence of the TCF to protect consumers from financial loss as a result of travel agent failure.

3.2 The need for consumer protection measures

Consumer prepayments and the market failure arising due to information asymmetry leads to the particular need for consumer protection

Addressing “market failure” As mentioned above, consumer protection measures are often a response to correct market failure, in this instance a re-weighting of risk in favour of consumers. The traditional style of interaction between a travel agent and a consumer is that of “pay now, consume later”. That is, travel agents take receipt of funds for a service to be provided, normally by another entity (the supplier), later. Consumers lose the security of their prepayments once they have been passed to the agent and later the supplier. It has been suggested (CIE 2000, p 27) that there is an information asymmetry between consumers and agents. That is, it may not be possible for consumers to know about the financial viability of an agent and the quality of their advice. Accordingly, consumers have no real way of assessing the financial risk of their decision to deal with a particular agent. Likewise, for the agent, it may not be possible for it to know the full details of the financial viability of suppliers (eg airlines, tour companies) and their capacity to deliver. The argument that this information asymmetry exists proposes that there be regulation to address the imbalance between the parties to the transaction. International practice The existence of industry specific regulation of travel intermediaries and other travel providers around the world suggests a widely accepted case for industry specific regulation to protect consumers. The European Union (EU) is a good case study. In 1990, the EU Council issued a Directive (90/314/EEC) on package travel, package holidays and package tours (the Directive). Amongst other things, the Directive contains a provision (Article 7) on the security to be provided by organisers to cover repayment of the price and repatriation of consumers in the event of the organiser’s insolvency. EU member states have responded in varying ways to the Directive, with the majority implementing licensing and guarantee schemes to protect consumers. It should be noted however, that the EU currently has the Directive under review, in particular Article 7. In the United Kingdom, the Civil Aviation Authority operates the Air Travel Organisers’ Licence Scheme (ATOL). ATOL is a financial protection mechanism which provides protection for customers who book ATOL-protected holidays/flights with operators who hold an ATOL. As with the EU, the UK also currently has its scheme under review following significant pressure placed on the Scheme’s funds with the collapse of several large tour companies. In New Zealand, the Travel Agents’ Association of New Zealand (TAANZ) operates a voluntary bonding scheme that provides consumers protection against agent default, albeit with limited funds (NZ$2m).



While there appears to be some question over the manner of consumer protection regulation, particularly in light of reviews in the EU, UK and here in Australia, there does appear to be a consistent recognition of the need for industry-specific consumer protection regulation in the travel services industry. Conclusion AFTA concludes that given the nature of the industry (where prepayments are made by consumers), the existence of information asymmetry between consumers, intermediaries and suppliers, and a general acceptance of the need for consumer protection regulation in other countries, that there is a need for consumer protection measures in the travel/travel-related services market. The more important issue, which is addressed in this paper and by the MCCA Review, is what level and form of protection measures should be implemented. In particular, given the industry dynamics and mode of interaction between consumers, intermediaries and suppliers, what is the appropriate type of protection measures.



4 The need for reform

4.1 Overwhelming need for reform

There is an overwhelming need to reform the existing regulatory system …

While the current regulatory scheme has served its purpose in the past, AFTA believes that there is an urgent and overwhelming need to reform consumer protection measures in the travel services market, in particular in relation to the TCF. In this chapter, we outline the reasons why there is a need for reform. AFTA concludes that the current regulatory scheme is: • Outdated - it has not evolved or been amended to reflect current day

realities; • Narrow – it does not apply equally to all providers in the industry and

hence generates an ‘uneven playing field’; • Inefficient – it is costly for the government, industry and consumer alike

and does not constitute a proportional regulatory response to the consumer rights and losses being protected;

• Excessive – it constitutes a high level of regulation for a relatively stable industry; and

• Impractical – a compensation fund could not practically be capitalised to cover exposure of a large collapse (eg Ansett and Traveland). Governments would be reluctant to act as “lender of last resort” to cover a shortfall of capital.

These issues are explored further in the sections that follow.

4.2 The current scheme is outdated

Innovation in the market and the changing nature of the industry means that the regulatory system is no longer appropriate

The current regulatory scheme was established in 1986 in an environment much different to that which exists today. Despite recommendations for significant reform made in 2000 (CIE 2000), little change has been made to the system in over 20 years. Contemporary environment is much different Chapters 1 and 2 of this submission outlined the current day dynamics and operation of the travel services industry. The current industry is vastly different to that which existed in 1986 when the present regulatory scheme was implemented. Key features of today’s operating environment that are incompatible or inconsistent with the regulatory scheme are outlined below. Consumer-Supplier dealings Consumers are increasingly booking travel direct with suppliers. These dealings are easily facilitated by modern booking mechanisms such as online bookings over the internet. As these methods improve and more consumers become more reliant on them, this spurs further growth in on-line product offerings to attract the consumer. A recent study highlighted that the trend to online bookings will continue and



will increasingly become the dominant form (Ibis 2009). Industry composition The make up of the travel agent industry has changed considerably in the last 20 years. Key changes have included: • Vertical integration of different operators in the supply chain; • Consolidation and corporatisation of operators through growth in

corporate and/or franchised retailers; and • Globalisation of systems and operators. These changes have led to a change in the make up of the industry, with fewer independent outlets and more uniform standards through agents. Evolution in payment technologies New payment methods (eg EFTPOS, credit and debit cards) allow consumers to more easily transact directly with suppliers, facilitating the growth in direct supplier bookings mentioned above. Financial evolution also changes the way that agents interact with their suppliers and financial institutions. For example, today’s credit card transaction systems permit agents to conduct sales using a supplier’s (eg airlines’) merchant facility. This means that a consumer’s funds by-passes the agent and is thus not at risk with the agent. This makes the TCF consumer compensation mechanism redundant.

Lack of reform following previous reviews has meant that the system has failed to catch up with current day practices

Reviews have not yielded reform AFTA is aware of two reviews of the regulatory regime in its 24 year life. AFTA concludes that both these reviews have yielded insignificant reform given the significant level of industry change that has taken place in that same time period. CIE Review, 2000 The national scheme was subject to a major review under National Competition Policy in 2000. This review, conducted by the Centre for International Economics (CIE 2000), made recommendations for significant change in the approach to regulation in both the short and long-term. In the long-term, the CIE called for the complete removal of the TCF and prescriptive licensing. In the short-term, it recommended opening up the TCF to competition and a reduction in licensing requirements. Despite this thorough review, the CIE recommendations were rejected by MCCA as, in their view, the review did not properly take into consideration the public benefit and there was concern that no private sector operators would step in to provide competition to the TCF. AFTA notes that despite similarities in its views to the CIE, it is significant that the reform proposed by AFTA is different to that recommended by CIE. Furthermore, industry evolution has continued at a rapid pace and the existence of other consumer protection measures (such as charge back and travel insurance), should allay the concerns MCCA expressed in 2000 regarding consumer interests.



Joint Working Group review, 2004 Following the collapse of Ansett Airlines in 2001, a Joint Working Group of industry, consumer representatives and TCF Trustees was formed to examine the capital adequacy of the TCF, including alternative funding options. The report (TCF 2004) made recommendations in respect of: • Reducing the risk of agency failure; • Achieving and maintaining adequate capital reserves; and • Limiting the TCF’s exposure to claims. Some recommendations for capital adequacy and other administrative aspects were implemented, but there was no consideration given to the overall relevance, effectiveness and applicability of the regime, and alternative regulatory and non-regulatory options. Furthermore, an AFTA proposal for a more broadly based compensation scheme encompassing end-supplier insolvency funded by a levy contributed by consumers was not considered. AFTA concludes that despite recommendations for reform of the manner of funding the TCF made by both of the above reviews, there has been no substantive reform in this area as a result of the reviews.

4.3 The current scheme is narrow

Limited coverage by the TCF results in inconsistent access to compensation for consumers depending upon their mode of booking

The current scheme has an increasingly narrow application to travel providers, and therefore consumers. This has arisen due to the way the industry and consumer-supplier interaction has developed (see above) and the failure of legislation to be amended and updated. Suppliers and some intermediaries not covered For regulatory purposes, the definition of “travel agent” is limited and hence the scope of protection is limited. The definition of “travel agent” specifically excludes operators who own their own “conveyance” (eg airplane, cruise ship). Accordingly, airlines and cruise ship operators are not covered by the current regulatory scheme. The advent of on-line accommodation booking agencies has spurned another line of trade that is not covered by existing regulation. This is because accommodation only services are not within the scope of the definition of “travel agent”. As consumers move to use on-line booking methods and as suppliers have increasingly moved to directly transact with consumers, there is an increasingly wider scope of operations that are outside the current regime. This less than comprehensive coverage of operators generates an inequitable operating environment for licensed operators. Suppliers and intermediaries who are excluded from the regulatory regime do not face the compliance costs of regulated intermediaries.



Majority of air travellers not covered by TCF An examination by AFTA of passenger profiles of Australian air travellers revealed that less than half of travellers (domestic and international) purchased in a manner that would be covered by the TCF. It was found that 55% of travellers were NOT covered by the TCF. See Graphic 4 below: Graphic 4: The TCF protects less than half of Australian air travellers

This study re-enforces the narrow application of the current regulatory scheme. Limited and unclear period of TCF protection A reality that is not well understood by the travelling public is the fact that consumers’ funds are only protected for the period they rest with the intermediary. Once the agent has remitted funds to the supplier, a consumer no longer has recourse to the TCF should either the agent or supplier fail. Consumers therefore only have a limited “window of protection”. Furthermore, because funds move increasingly quickly between agents and suppliers (particularly for airline ticket payments through IATA’s Billing Settlement Program – BSP), the “window of protection” is ever reducing. Also, as the movement of funds is not transparent to the consumer, even a well informed traveller is not aware of at what point in time his/her TCF protection ceases.

4.4 The current scheme is inefficient

Inefficiency is manifest in the current system through: - duplication - expensive claim administration

Duplication of regulation The current regulatory scheme is implemented through state based legislation. Accordingly, operators who conduct business in multiple states/territories face



the inflated compliance costs of interacting with multiple regulators. In practice, this means dealing with multiple agencies for the same matter and paying multiple licence fees. Different interpretations on legislation by different regulators also generates cost and inefficiency. Duplication is not just a cost to business. The Productivity Commission and the Council of Australian Governments (COAG) have both recognised the cost associated with duplicated state regulation and are taking steps to address this through COAG’s National Partnership Agreement to Deliver a Seamless National Economy. TCF payment inefficiency Comparing the value of TCF compensation payments to the cost of administering the TCF illustrates the acute inefficiency of the TCF system. An analysis of claims made in 2008 reveals: • Number of claims paid - 662 • Gross value of claims - $2,049,019 (before recoveries). • Total expenditure by the TCF (net of claims) - $2,824,245 • Expenditure attributable to administration of claims - $889,19715 Analysis These figures demonstrate: • The total costs of administering the TCF exceed the value of claims paid.

• The average claim value ($3,095) exceeds the average total cost to process a claim ($4,266).

• The average directly attributable cost ($1,343) is equal to 44% of the average claim value ($3,065).

These results for the 2008 year are demonstrated in Graphic 5. A further point to note is that the gross claim value will always reduce as a result of recoveries made from failed agents and from guarantees. For example, in 2008, the TCF recovered $1,077,028. These recoveries effectively halve the gross claim expense, and further emphasise the relative inefficiency of the compensation approach. We note that it is difficult to arrive at an average cost to assess and pay a claim. There are a variety of methods to calculate this. However, we believe the two estimates provided above are instructive in providing a range of the likely cost of paying a claim. We acknowledge that claim value will vary from year to year but that TCF expenditure (ie overheads) should remain fairly constant ($2.8m in 2008). Hence, in years when the value of claims is higher (as it was in 2008) then the negative disparity ($775,226) will not be as great. However, in years when the

15 This has been estimated from the 2008 Revenue and Expenditure Statement of the TCF by taking costs directly attributable to claims assessing and adding a proportion of all other overheads (apportioned on the basis of salaries of claims staff divided by total salary costs).



claim value is lower (as it was in 2005 and 2006 when claims were under $1m), then the negative disparity will be much greater (assuming constant overhead costs). On this point, AFTA notes that in the last 10 years, the value of claims has only exceeded $2.8m on 2 occasions (2007 and 2002). In any event, even when the value of claims paid exceeds overhead costs, the relative inefficiency between the value to consumers and the costs of administration is clearly apparent.

Graphic 5: The TCF is an inefficient way to process claims

4.5 The current scheme is excessive regulation

Current regulation is not a proportional response to the issue being addressed

One of the eight principles of best practice regulation identified by COAG is that government action should be effective and proportional to the issue being addressed (our emphasis) (COAG 2007, p 4). AFTA concludes that given the relatively low level of failure of intermediaries in the industry and low level of compensation payments made by the TCF relative to the total value of travel services in the economy, the TCF is not a proportional regulatory response to the problem being addressed, and represents excessive regulation. Proportional regulation COAG has agreed that all governments will ensure that regulatory processes are consistent with eight principles. Principle 8 provides that government action should be effective and proportional to the issue being addressed (COAG 2007). Proportionality refers to ensuring that government action does not ‘overreach’. Government action should be commensurate with the magnitude of a problem, its impacts, or the level of risk (COAG 2007, p 6).



Travel intermediary failures Statistics on travel intermediary failures over the last six years demonstrate the stable and low level of business failure. Graphic 6 below demonstrates that in the period 2003 to 2008, travel agent failure numbers have ranged between 10 and 40. The number of agents remained stable at between 4,500 to 4,900 (TCF 2008). Thus the failure rate is less than 1%, ranging from 0.2% to 0.8%. AFTA concludes that the travel agent industry is excessively regulated, a level that most businesses are not subject to, when the level of agent failure is relatively low. Graphic 6: The TCF represents excessive regulation of a stable industry

Cost of guarantees As outlined earlier in this submission, travel intermediaries who are not able to meet the financial ratio tests prescribed by the TCF are required to provide the TCF a bank guarantee equal to 150% of maximum client deposits held at any time throughout the previous financial year. An analysis of the annual reports of TCF for the past 5 years reveals the level of aggregate security held by the TCF, the level of recoveries from guarantees, and recoveries as a percentage of the security held. This is outlined in Graphic 7. The Graphic also summarises the net asset position of the TCF for each year. This demonstrates that the net asset position is a significantly different figure from the level of guarantees held and allows a comparison of true net worth against contingent guarantees.



Graphic 7; Guarantees held by TCF and TCF net assets, 2004-2008

Year 2008 2007 2006 2005 2004 Guarantees held by TCF

102,399,913 91,944,244 84,049,072 65,128,220 76,285,922

Recoveries 486,233 1,836,677 217,481 318,895 127,978As % of guarantees

0.47 2.0 0.25 0.49 0.17

TCF Net Assets*

24,505,300 21,366,098 19,639,881 14,848.067 12,373,704

Source: TCF Annual Reports * TCF Net Assets refers to Fund Total Assets minus Total Liabilities. The table above demonstrates the following: • The aggregate value of guarantees is significant. • The cost of providing such guarantees is high for those participants

required to furnish them (see below). • With the exception of 2007, the level of recovery against the guarantees is

very low, being less than $500,000, or 0.5% of the total value of guarantees held.

Financial cost of guarantees While funding costs to take out a bank guarantee will vary depending upon each applicant’s own circumstances, an indicative cost of taking out a bank guarantee is 2.5% of the value of the guarantee, plus in some instances a charge over another tangible asset. On this assumed indicative cost, the aggregate cost to industry of the 2008 level of guarantees is over $2,500,000. This cost, which would expected to be incorporated into a businesses charges, exceeds the annual gross value of TCF claims paid out in 8 of the last 10 years (commencing in 1999). This level of financial cost, which would be augmented by the opportunity cost of the charge held over any other business asset, is disproportionate to the level of potential benefit to consumers. This analysis further re-enforces the view that the cost of complying with TCF requirements is high, and out of proportion with the typical level of compensation paid annually by the TCF (which has not exceeded $4.1 million in the past 5 years).

4.6 The current scheme is impractical

There is a practical impossibility to capitalise a fund to cover against all potential losses

Inability to fully capitalise a large fund Previous reviews of the TCF (TCF 2004) have indicated that a fund capitalisation of between $40 million to $60 million is required to insure against the then risk concentration of the TCF. The TCF concluded that this level of capitalisation would be “unrealistic and an unjustifiable imposition on industry” (TCF 2004, p 6). AFTA agrees. The experience of the Ansett-Traveland collapse illustrates the point that the TCF will continue to be undercapitalised to meet losses generated by a large scale collapse. In that case, Federal and State Governments were called



upon to “top-up” the TCF’s capital to meet the large exposure. TCF claims paid in 2002 (the year after the Ansett-Traveland collapse) totalled over $11 million. This level of exposure would be increased should the regulatory regime be extended to cover suppliers as well as intermediaries – as is recommended in this submission.

Experience shows that the ultimate risk can reside with Government

Practical and political risk exposure for Government The practical and political experience of the Ansett-Traveland collapse in 2001 demonstrates the practical and political pressure that is brought to bear on Governments to underwrite any deficiency in the TCF’s funds as a result of a large scale collapse. As a result, the compensation aspect of the current regime represents a considerable financial risk to Government and taxpayers. AFTA concludes that this is an unreasonable and unnecessary financial risk for Government. We believe it is inappropriate that the Government essentially acts as an underwriter of last resort to traveller risks.



5 Options for reform

5.1 The two dimensions of consumer protection

The CIE review of the National Scheme for the Regulation of Travel Agents

identified that travel agent industry specific consumer protection mechanisms are present in two aspects (CIE , p 24): • Guarantee of service quality (through competent travel agents); and • Protection against financial loss arising from the failure of agents to

account for monies deposited with them. AFTA has adopted this analysis as a foundation to developing policy reform options and refers to these two regulatory aspects as the two dimensions of consumer protection. AFTA has developed a graphical tool to represent the two dimensions of consumer protection which allows mapping of alternative reform options – see Attachment 1.

5.2 AFTA Policy Option Reform Map

AFTA has developed a unique tool to map reform options

Framework for assessing reform options To assist the analysis and development of reform options, AFTA has developed a unique Policy Option Reform Map (the Reform Map) which provides a framework for mapping possible reform options (see Attachment 1). The policy responses to the two dimensions which are mapped on the Reform Map are: • Guarantee of service quality = Licensing • Protection against consumer loss = Consumer Compensation. The Reform Map applies the two dimensions of consumer protection outlined above, by specifying alternative options for both dimensions. Description of reform map The policy responses for both dimensions of service quality and protection against consumer loss are specified on the Y and X axes of the Reform Map respectively. Varying policy response options for each dimension are then labelled on each axis, in a descending order of regulation (Licensing - Y axis) and in a descending order of competition on the X axis (Consumer Compensation). The Reform Map also has the following features: 1. Delineation of Guarantee Fund vs Travel Insurance: A grey vertical line separates Guarantee Fund options from Travel Insurance options. The Travel Insurance segment of the graph is shaded in light gray. All options to the left of the vertical line are Guarantee Fund options (contributed to by industry, consumers or both) while, all options to the right are Travel Insurance options, funded by the consumer only.



2. “Who Pays” indicator: Under the X axis there is a shaded bar that indicates who finances the consumer compensation mechanism, the industry or the consumer. In relation to the Industry/Consumer Co-fund option, it is jointly funded. 3. Plotting of reform options: Various reform options are then plotted in the graph according to their specifications on Licensing and Consumer Compensation dimensions. The current scheme can be seen in the top left of the graph (which involves Licensing and a compulsory membership of an Industry Fund). The other end of the regulatory spectrum, full deregulation involving no licensing and no mandated insurance cover, is plotted in the lower right of the graph. Other options which have been plotted include: • The short-term reform option recommended by the CIE in 2000. • The long-term reform option recommended by the CIE in 2000. AFTA recommended options A second version of the Reform Map (Attachment 2) graphs AFTA’s recommended options. • AFTA short-term reform option - Co-regulation + Private Travel Insurance

for consumer; and • AFTA long-term reform option - Registration only + Private Travel insurance

for consumer. Detailed discussion regarding AFTA’s recommended options and why there is a short and a long-term option is contained in Chapter 6.

5.3 Who is subject to regulation?

Not all “travel service providers” are currently subject to regulation which leads to market inequity and distortions

Current regulation As outlined in Chapter 2, State/Territory legislation requires “a person carrying on a business as a travel agent” to be licensed. The legislation then defines who is a person carrying on a business as a travel agent by reference to the functions/activities they carry out. AFTA proposal – application to “travel service providers” AFTA’s proposal as to who should be regulated under a reformed model would see a broadening of those subject to regulation. This is discussed in detail in Chapter 6. For present purposes, in addition to intermediaries who are currently covered, AFTA would seek to extend coverage to principals (suppliers ie airlines, cruise, rail and bus companies), and not restrict it to businesses which sell tickets for passage on a “conveyance” (whether or not it combines with accommodation as well). Accordingly, accommodation booking agencies (on-line or otherwise) would participate in the new regulatory scheme. For present purposes in the discussion that follows, AFTA will describe the expanded group subject to regulation as “travel service providers”.


including the role of the Travel Compensation Fund 5.4 Licensing (the ‘Y axis’)

There is an expansive spectrum of licensing options available

Licensing spectrum As outlined above, the Y axis on the Reform Map lists licensing options in descending order of extent of regulation from the top to the bottom of the axis. The licensing spectrum can extend from positive (prescriptive) Government licensing, encompassed in legislation, through to no licensing requirement. The intermediate options have been identified by reference to alternative regulation options outlined in the Office of Best Practice Regulation’s Best Practice Regulation Handbook, August 2007 (OBPR 2007). Appendix A of the Best Practice Regulation Handbook outlines the following spectrum of regulation (OBPR, p 96): • Explicit government regulation; • Co-regulation; • Quasi-regulation; and • Self-regulation. For conciseness in the Policy Reform Map with the Licensing dimension, AFTA has collapsed Quasi-regulation into Co-regulation. Explicit government regulation Explicit government regulation, or “black letter law” refers to regulation that is clearly specified in legislation. The current regulatory system for consumer protection in the travel agent industry falls into this category. This form of regulation has the following unique features: • It changes behaviour – by detailing how entities should act; • It relies on monitoring – to detect non-compliance; and • It imposes sanctions – to deter non-compliance (OBPR 2007, p 104). Explicit regulation is often said to have more certainty and greater effectiveness because of the threat of sanction. However, it suffers from the following drawbacks: • Inflexible: It may not deal with diverse situations or changes over time,

meaning that it can become outdated and counter-productive; • Slow to respond: There are often time lags inherent in amending

legislation to update the regulatory system; • Lack of accountability: Government costs of administration are often not

subject to as much scrutiny as other regulatory approaches that utilise the resources of industry;

• Compliance costs: Compliance costs are often high as the law often does not reflect commercial practices.

AFTA submits that the current regulatory system suffers from all the downsides of explicit regulation identified above. This form of regulation is usually used where there is a high-risk problem (for



example with health or safety), universal application is required, there is evidence of systemic problems in an industry and existing industry bodies lack the ability or resources to enforce regulatory compliance. Co-regulation Co-regulation refers to a situation where industry develops and administers its own regulation, but government provides legislative backing to allow enforcement (OBPR 2007, p 100). There are various ways in which government can support co-regulation including delegating enforcement power to industry, enforcing undertakings for compliance, having provision to apply a code of practice if industry fails to implement one, and prescribing codes as voluntary or mandatory. Quasi-regulation Quasi-regulation exists where governments put pressure on business to comply with rules that may not be legally binding (OBPR 2007, p 98). In these instances, governments use a range of rules to influence business to comply, but do not resort to legislation. Some examples of quasi-regulation include government endorsed codes of conduct or industry-government agreements, or like co-regulation, threatening binding regulation in the event of non-compliance. Quasi-regulation is said to benefit from flexibility and responsiveness that explicit regulation does not. It can also more easily adopt innovative and unique solutions. Quasi-regulation is often considered for situations where self-regulation will not work, but there is a need for a unique solution that can be provided by a strong industry association. Self-regulation Self-regulation is characterised by industry formulating its own rules and being responsible for their enforcement. The Federal Government requires that self-regulation be one of the first options considered in regulatory reviews (OBPR, p 97). Obligations for industry members are usually prescribed in a code of conduct. These rules can be amended and updated easily as industry changes dictate. As rules are made by the industry, they are more likely to be observed. Drawbacks to self regulation include lack of oversight to ensure community interests are protected. Rules are also open to conferring advantage or excluding entry. Self-regulation is often considered where there is no strong public interest concern, the problem is a low-risk event, and the problem can be fixed by the market (OBPR 2007, p 105). AFTA recommends (see Chapter 6) a co-regulatory and self-regulatory approach for industry regulation in the short-term and long-term respectively. AFTA believes that the drawbacks of explicit regulation outlined above do



overwhelmingly apply to the current regime (see Chapter 5) and needs to be replaced with a more appropriate regulatory response.

The proposed National Occupational Licensing Scheme provides a useful reference point for this review

The proposed National Occupational Licensing Scheme On 3 July 2008, the Council of Australian Governments (COAG) agreed to introduce a national licensing system (NLS) for specified occupations. The decision to progress the NLS acknowledged that Australia’s overlapping and inconsistent regulations impede productivity growth. An Intergovernmental Agreement (IGA) for the NLS was signed by COAG members on 30 April 2009. The IGA contemplates that the NLS will be operational for the first wave of occupations on 1 July 2012. The objectives of the NLS are outlined in Clause 4 of the IGA and include, amongst other things: • Ensure licences allow businesses to operate in all jurisdictions; • Ensure that licensing arrangements are effective and proportional to that

required for consumer protection, worker health and safety, while ensuring economic efficiency; and

• Promote national consistency in licensing structure and policies, regulation and disciplinary procedures.

The NLS agreement proposes a national delegated agency model where a national licensing body is established to develop policy and administer the system, but may delegate licensing services to the jurisdictional regulators. The arguments underpinning the NLS apply equally to the need to have a uniform licensing or registration system for travel service providers. Multiple and inconsistent licensing regimes and requirements are a burden on businesses and individuals who operate across multiple jurisdictions. The infrastructure established to implement the NLS may be able to be utilised to implement the Licensing component of AFTA’s reform proposal (see Chapter 6).


including the role of the Travel Compensation Fund 6 AFTA reform proposals

6.1 Introduction

By reference to the two dimensions of regulation, AFTA has developed a short and a long term reform proposal

In this chapter, AFTA sets out its proposals for reform of the consumer protection regime in the travel services market. AFTA has developed its reform proposals against the following parameters: • A Short-Term and a Long-Term reform proposal; • An interim ‘safety net’ arrangement; and • The framework of the ‘two dimensions’ of regulation outlined in Chapter 5. AFTA’s Guiding Principle for Reform In developing its proposals for reform and in formulating both the short-term and long-term proposals, AFTA has been driven by an overarching guiding principle:

To achieve a fair market environment for the consumer and travel services provider where the consumer is provided the same guarantee of service level and opportunity for protection from loss irrespective of the sales channel used to purchase travel services.

To assist in understanding the AFTA proposals, Attachment 2 is a revised policy reform map that plots the AFTA short and long-term reform proposals.

6.2 Scope of application

The new regime will apply to “travel services providers” – a term to be defined

Travel services providers AFTA proposes that the new regulation apply to a broad spectrum of industry participants who will be described as “travel services providers”. The term “travel services provider” (TSPs) will be defined in the new uniform legislation. Principles which will instruct the development of the definition include: • TSPs to include both suppliers (ie airlines, cruise, bus and train operators,

tour providers) and intermediaries (agents, wholesalers, consolidators). • TSPs will include businesses who organise travel as part of their service

offering, such as conference organisers and event managers. • TSPs will include on-line providers, as well as operators who work face-to-

face with consumers. • Accommodation providers (not booking agents) will be excluded from the

definition as they already have a range of industry based regulatory schemes.

There will be an expanded degree of coverage compared to the existing regime to improve equity in the industry and to discourage distorted conduct (eg. pushing operations offshore or online).


including the role of the Travel Compensation Fund 6.3 Short-term and long-term proposals

Substantive reform can be achieved over a period of time, say 5 years, in two steps …

Short-term proposal an interim step in reform AFTA has recommended both a short-term and long-term proposal as it believes that there is the need for an interim step (the short-term proposal) to achieving the ideal (long-term) regime. As an indication, AFTA believes that the short-term model could be implemented for a period of 5 years. Adoption of the long-term model should be preceded by a further review after 4 years of the short-term model in operation. This timeframe of key events is outlined in Graphic 8 below. Graphic 8: Timeframe for AFTA proposal for reform of consumer protection

As outlined below, AFTA’s long-term proposal represents significant reform and is a significant departure from the current regime. In terms of the Policy Reform Map outlined in Chapter 5, the long-term proposal is located on the right of the map, while the current regime is located at the top left. The extent of movement is graphically depicted by this extent of movement along the map (see Attachment 2). To ease any consumer concern regarding the introduction of the new regime (which involves removal of the TCF), AFTA recommends that an interim ‘safety net’ mechanism be put in place for 5 years. The safety net mechanism (explained further below), will involve preservation of TCF funds for use in “exceptional circumstances” to compensate travellers who face hardship and have no other recourse. While the short-term proposal is an interim step towards AFTA’s preferred model of regulation, it represents a significant improvement in the regulatory regime as it achieves the following: • Uniformity: Introduces a uniform licensing requirements across all states

and territories; • Operator integrity: Maintains industry standards, and therefore consumer

confidence and protection, through the introduction of an industry accreditation body;



• Equity: Introduces an equitable application of regulation to include the majority of travel service providers;

• Efficiency: Removes the inefficient and costly TCF; and • Protection from loss: Maintains consumer protection for loss from

insolvency through extending supplier insolvency insurance currently available through commercial travel insurance to include intermediary insolvency. The recommendation to offer this on an optional basis provides the consumer with choice as to whether he/she wants to opt in or out of cover.

Short-term vs Long-term proposal – common features While there are a number of differences between the short and long-term proposals, both have the following common components: • Uniform regulation across state/territory jurisdictions; • A minimum specified level of operator integrity; • Equitable regulation of all travel services providers; and • A more efficient approach to consumer compensation through removal of

the TCF and replacement with intermediary insolvency protection insurance.

6.4 AFTA Short-Term Proposal

AFTA’s short term proposal comprises three key components: 1. New uniform legislation; 2. New licensing/ accreditation rules; and 3. Travel insurance will substitute for the TCF to address the need for consumer compensation

Summary The AFTA short-term reform proposal involves the following: 1. Repeal the existing state/territory Travel Agents Acts. 2. Introduce new uniform legislation that would establish the framework for a new licensing and accreditation regime for a broader range of travel services providers. 3. Introduce a new industry accreditation scheme that would link with the licensing system. 4. Disband the TCF. 5. Encourage the expansion of existing travel insurance cover for supplier insolvency to cover intermediaries. The AFTA short-term proposal is graphically depicted in Graphic 9 as comprising three key components. #1: Uniform licensing legislation. #2: Travel services provider accreditation. #3: Travel insurance which incorporates supplier/intermediary insolvency cover.



Graphic 9: AFTA proposed short-term model for consumer protection

New uniform licensing legislation will remove inefficiency arising from duplication

Part #1 - Uniform licensing legislation Remove existing state based legislation AFTA recommends the removal of existing state and territory Travel Agents Acts and their replacement with a new uniform Act. While the State and Territory Travel Agent Acts are broadly similar, the existence of 8 different Acts does create an unnecessary duplication and compliance cost for travel intermediaries that operate across state borders. The new uniform legislation could be achieved in one of two ways: • New Commonwealth Act: Subject to constitutional requirements; the

Commonwealth could introduce a new Act to apply nationally (this is AFTA’s preferred approach); or

• Host jurisdiction for new State Acts: One state/territory could be nominated to legislate a new Act to implement the new licensing/accreditation system. All other state/territories would adopt that Act and any changes that are made to it over time.

The COAG proposal to implement a uniform licensing system for specified occupations (the NLS) recognises the efficiency losses that flow from duplicated and inconsistent licensing regimes across jurisdictions. AFTA recommends that the new regulatory regime for travel services providers adopt a similar structure proposed by COAG for the NLS. That is: • National licensing body: A new national licensing body is established to

develop policy and administer the new licensing system. This body would



also establish and administer the proposed associated accreditation system for TSPs (see #2 below) and co-ordinate a national register of TSPs.

• Licensing services: Jurisdictional regulators, such as the State Fair Trading

Offices, could act as agents for the new licensing/accreditation body to facilitate licensing and compliance services in state locations.

New legislation To extend the consumer protection measures contained in the existing state legislation, the new national uniform legislation would include, amongst other things, existing licensing requirements such as (all section references are to the Travel Agents Act 1986 (NSW)): • Applicant eligibility tests such as minimum age, probity and conduct tests

(section 10); • Disciplinary measures for non-compliance (Division 3); • Discouragement of unjust conduct (section 28); • Requirement to display licences (section 33); • Requirements as to advertising (section 33);and • Requirement to maintain records and produce them for inspection

(sections 41 and 45). In addition, the new legislation would include a provision that required TSPs be accredited by the new licensing body. In drafting the new legislation, regard should be had to existing conduct provisions in the Trade Practices Act and the state-based Fair Trading Acts to ensure that there is no unnecessary duplication between these Acts and the new uniform licensing legislation. The new national system would be overseen and administered by a new licensing body created under the Act. For the purposes of this submission, AFTA proposes use of the name National Travel Industry Licensing Scheme (or NTLS) to be administered by the National Travel Industry Licensing Board (NTLB). The NTLB would be responsible for both licensing and accreditation, with accreditation (see #2 below) being a pre-requisite to be granted a licence.

TSP accreditation will strengthen the licensing protection and act as a precursor to the self-regulatory model proposed for the long-term

Part #2 – Travel services provider accreditation AFTA recommends the introduction of a travel services provider accreditation system to link with and re-enforce the licensing system to provide an additional mechanism to guarantee service standards for consumers. AFTA recognises that the existence of service provider accreditation systems gives consumers more confidence in dealing with accredited suppliers, in that there is a set minimum service level standards backed by some ‘policing’ and control mechanism to ensure minimum standards are maintained. AFTA also acknowledges that the prudential supervisory role of the TCF has also provided the industry and the consumer a level of protection by focussing members on the need to properly manage the financial aspects of their business, notwithstanding that AFTA has serious concerns regarding the actual financial tests and ratios that the TCF applies.



The NTLB outlined in Part #1 above would have responsibility for developing and administering the accreditation system. Accreditation of providers would be a pre-requisite to obtaining a travel services provider licence under Part #1 above. Purpose of accreditation system The accreditation system would serve two key purposes. • Service standards: The NTLB would prescribe minimum service standards to

be adhered to by all members (to be referred to as the TSP Code of Practice).

• Prudential oversight: The NTLB would undertake a prudential oversight role similar to that undertaken by TCF presently.

Service Standards Specification of minimum standards for a business is a common feature of many industries. The standards may be specified in codes of practice, codes of conduct or ethics statements. The Office of Best Practice Regulation (OBPR) acknowledges these systems as effective regulatory mechanisms within the self-regulatory and co-regulatory styles of regulation (OBPR 2007). In fact, OBPR requires self regulation to be one of the first options considered in review of regulation (OBPR 2007, p 97). OBPR acknowledges that a potential problem with self-regulation is obtaining industry compliance and coverage (OBPR 2007, p98). As the scope of coverage proposed by AFTA for the new system is quite broad, AFTA recommends a co-regulatory approach which involves legislative backing for the TSP Code of Practice. This will be achieved by linking licensing to a TSP achieving accreditation and undertaking to abide by the Code of Practice. AFTA has not sought to prescribe the content of the TSP Code of Practice in this submission. It will be necessary to consult with the industry and professionals experienced in drafting such codes to develop an appropriate Code. A research review should be undertaken to see what similar Codes exist and what may work well for the travel services industry. Many industry bodies in the travel industry, for example AFTA and the Australian Tourism Export Council (ATEC), prescribe a code of ethics. These could be reference points for code development. Possible areas that could be addressed in the Code of Practice include: • Competency/Professionalism – qualification and/or experience

requirements; • Independence – avoiding conflicts of interest and ensuring impartiality of

advice; • Disclosure – provide full details of terms of conditions of service; and • Confidentiality – undertakings to treat all dealings and transactions

confidentially. To further enhance the power of the accreditation system as a tool to provide consumer protection, the NTLB could consider applying for a licence from the Federal Government’s proposed Tourism Quality Council of Australia (TQCA). Under proposals from the Federal Tourism Minister, industry bodies can apply to TQCA for licences to operate an accredited quality program.


including the role of the Travel Compensation Fund The accreditation system will capture the positive aspects of the prudential oversight role of the TCF without the burdensome costs and impracticalities

Prudential oversight The TSP Code of Practice outlined above would also prescribe financial and prudential rules for licensed/accredited TSPs. The NTLB would be charged with overseeing and monitoring minimum financial standards for licensed/accredited TSPs. Incorporating a prudential oversight role into the accreditation system maintains the benefits conferred by this function, presently undertaken by the TCF, for the ultimate protection of consumers. Again, AFTA does not prescribe in this submission the detail of the prudential rules as this will require detailed work and consultation. However, AFTA has strong views on the general nature of these rules and how they would be applied and complied with to ensure minimum compliance cost. Key features would include: • ‘Tiering system’: Application of a tiering system whereby different

compliance and reporting requirements would be specified by TSP turnover. A broad risk rating system could be developed for each tier that would then dictate the prudential rules applicable for each tier. Possible turnover categories could be: ⇒ Category 1 - <$5 million; ⇒ Category 2 - $5 million - $25 million; ⇒ Category 3 - $25 million to $100 million; ⇒ Category 4 - > $100 million.

• Use existing systems/concepts: The prudential rules should to the maximum extent possible rely on pre-existing systems and concepts. For example, for large entities subject to existing external reporting requirements, rules for preparing their financial statements should be applied.

• No bonds/guarantees: As the AFTA model does not encompass a Guarantee Fund to underwrite consumer compensation (refer Part #3 below), there is no requirement to provide bonds or guarantees.

• Minimise compliance costs: Compliance and reporting costs should be kept to a minimum by using where available existing reporting mechanisms – for example external financial reports prescribed for other purposes.

The National Travel Industry Licensing Board The structure and governance arrangements for the NTLB will need to be determined. Reference could be had to similar oversight boards for guidance. For present purposes, AFTA makes the following recommendations regarding the NTLB given its purpose and function within AFTA’s proposal: • Established by statute: The NTLB would be established by statute (refer Part

#1 above). This way the NTLB have the status and enforcement power of a co-regulatory regime.

• Appointment of Board Members: Board members would be appointed by the Federal Minister for Consumer Affairs on the advice of MCCA. The statute should prescribe Board Director representation from industry as well as Government.



• Industry input to governance: The Board should be bound to take advice from an Industry Advisory Panel that would advise the Board on governance and prudential standards to ensure that the rules set under the accreditation system are commercially practical and realistic.

New travel insurance products will address the consumer compensation aspect of consumer protection

Part #3: Travel insurance which incorporates supplier/intermediary insolvency cover.

The third essential component to AFTA’s short-term reform proposal concerns the consumer compensation dimension of regulation. AFTA recommends that the TCF be removed as the mode of consumer compensation and be replaced with a consumer choice to take out travel insurance that includes supplier and intermediary insolvency protection. Enhancement required to existing travel insurance policies As outlined in Chapter 2 above, travel insurance providers already offer insurance products that includes protection for travellers in the event of a supplier’s insolvency (eg airline, hotel, etc). We understand that a reason why travel insurers do not extend this to intermediary insolvency is because the TCF provides this. In AFTA’s view, it should only be an incremental step to expand policies to cover intermediary insolvency. To fulfil AFTA’s recommendation, travel insurers would be encouraged to extend existing policies to cover intermediary as well as supplier insolvency. The low level of failure in the industry should encourage insurers to include this cover in their policies. AFTA is keen to work with insurance companies to assist them assess and develop these products. Expanding the coverage of travel insurance – role for NTLS As outlined in Chapter 2 above, one sampling of a large AFTA member shows that close to 60% of international travellers take out travel insurance that includes supplier insolvency cover. AFTA believe it is reasonable to assume that there would be a similar level of subscription to product that includes intermediary failure protection, particularly if insurers offer this cover as part of existing comprehensive policies that already provide supplier insolvency protection. To expand the extent of coverage of comprehensive travel insurance, AFTA recommends that a requirement for NTLB accreditation be an undertaking by members to compulsorily offer travel insurance to all customers (although in practice, there may need to be some minimum purchase amount – say $1000). While travel agents would be one source for provision of travel insurance, we note (see Chapter 2) that travel insurance is widely available from a number of different channels. Expanding the coverage of travel insurance could also be promoted through such things as: • Education campaigns: Education and information campaigns by the NTLB,

AFTA and the Insurance Council of Australia regarding the availability and benefits of travel insurance; and

• Government promotion: Promotion of travel insurance by Government agencies such as the Department of Foreign Affairs and Trade (through the ‘Smartraveller’ website) and Tourism Australia.



The heightened exposure for travel insurance would hopefully push up demand for insurance and increase product availability and competition in the market. Financial Ombudsman Service The Financial Ombudsman Service (FOS) would retain the authority to fairly and independently resolve disputes between consumers and insurers under insurance contracts. The FOS currently has jurisdiction to act in disputes involving travel insurance. AFTA argues that the presence of the FOS provides extra comfort and protection for consumers in a move to a broader level of travel insurance coverage.

An interim safety net arrangement will be implemented to address cases of extreme hardship

Implementation of interim ‘safety net’ arrangement To assist with the transition to the new model, in particular in relation to the removal of the TCF, AFTA recommends implementation of an interim ‘safety net’ arrangement to protect consumers in exceptional circumstances. Preservation of TCF funds for 5 year period AFTA recognises that many travellers are accustomed to the existence and security offered by the TCF and that its removal may cause some concern. To ease this concern in the short term, AFTA proposes that the funds in the TCF as at the date of introduction of the new regulatory regime be preserved for a period of 5 years and be used to compensate travellers in exceptional circumstances. “Exceptional circumstances” would need to be defined, but would include exceptional or desperate circumstances where travel insurance is not held, or if the insurer defaulted on payment. AFTA would work with the TCF and the new NTLB to arrive at what would constitute “exceptional circumstances”. AFTA recommends that upon commencement of the new regime (which would include winding up of the TCF), that existing surplus TCF funds be transferred to a nominee who would administer the funds for the defined purposes stated above for a period of 5 years. Any surpluses left at the conclusion of 5 years could be appropriately divided between participating state/territory governments. The travel industry would be prepared to form an appropriate nominee entity for this purpose should this recommendation be accepted. 6. Equity for all operators Application of the regulatory regime to all TSPs will remove discrimination that currently exists between providers who are bound by the current regime (most intermediaries) and those who are not (some intermediaries and most suppliers).

AFTA’s short-term proposal generates benefits for consumers and industry

Benefits of the AFTA Short-term Proposal AFTA highlights the following benefits that are likely to accrue from the Short-term proposal.



Consumers 1. Maintenance of service standards The maintenance of a licensing requirement, enhanced by an accreditation system, will ensure service standards across TSPs will be maintained and improved. A government backed accreditation scheme provides a high level of security for service standards. 2. Consumer awareness and choice Consumers are free to choose if they wish to take out comprehensive insurance cover. The mandatory requirement for TSPs to offer insurance (under NTLS licensing/accreditation requirements) ensures that consumers are made aware of their options. 3. Reduced cost structures Removal of TCF bonding arrangements and compliance will reduce cost structures for the travel agent industry, relieving the pressure to increase service fees to consumers. 4. Interim safety net arrangement Consumers would have the comfort of a transitional arrangement whereby TCF funds would be preserved for a 5 year period to compensate travellers in exceptional circumstances. Travel Service Providers 5. Compliance efficiency – removal of duplication Adoption of uniform licensing rules across Australia will generate compliance savings for TSPs who operate in multiple states.

6.5 AFTA Long-term Proposal

AFTA’s long-term proposal embraces concepts of the short-term model while moving to an efficient, self-regulatory approach

Summary The AFTA long-term reform proposal involves the following (described in terms of how it would differ from the current regime, not the Short-Term Proposal): 1. Repeal the existing state/territory Travel Agents Acts (as for the Short-term Proposal). 2. Amend the new uniform legislation to establish a framework for a new registration system for a broader range of travel service providers. 3. Disband the TCF (as for the Short-term Proposal). 4. Encourage the expansion of existing travel insurance cover for supplier insolvency to cover intermediaries (as for Short-term Proposal). The AFTA Long-term proposal is mapped on the Policy Reform Map (see Attachment 2).



Graphic 10 below outlines the AFTA long-term recommendation. Graphic 10: AFTA proposed long-term model for consumer protection

Long-term Proposal and Short-term Proposal compared The distinguishing features of the Long-Term Proposal over the Short-Term Proposal are as follows: 1. Registration vs Licensing The Long-term Proposal involves a registration system, as opposed to a licensing system. The registration system proposed under the long-term Proposal involves registration of basic business entity details with a national registration body. In addition, a ‘fit and proper’ person test could be added and provisions in the new legislation regarding unjust conduct and sanctions could be maintained. A registration system was recommended by CIE in its 2000 review of the regulatory regime for travel agents (CIE 2000, p 116). CIE concluded that registration provides a mechanism for tracing agents to better ensure compliance with legal requirements and is a less costly regulatory system (CIE 2000, p 73). It went on to recommend that if there was no compulsory insurance provider, then a registration system for monitoring trace back and sanctions would be sufficient (CIE 2000, p 116).

The benefits of an industry accreditation system are likely to be carried forward into the long-term model

It is likely that having gone to the effort and expense of developing an industry accreditation system through the NTLS, some form of industry code of practice would continue in the long term, even in the absence of an endorsed accreditation system. Accordingly, it could be expected that a self-regulatory model would develop under AFTA’s Long-term Proposal.



The OBPR points out that there is less of a need for strong regulation where a problem can be fixed by the market itself (OBPR 2007, p 105). In terms of the consumer compensation dimension of regulation, AFTA argues that privately provided travel insurance provides this solution. Furthermore, in respect of the licensing dimension, AFTA submits that strong competition between providers would drive high standards and force out sub-standard providers. It should also be remembered that generic consumer protection measures embedded in the Trade Practices Act and the State Fair Trading Acts still remain in place to protect consumers from unfair business practices. 2. Formal removal of prudential oversight Removal of the formal accreditation system integral to the Short-term Proposal implies the removal of the prudential oversight role. AFTA recommends that before transition to the Long-Term Model, the need to continue with prudential oversight be evaluated. Market competition and voluntary adoption of industry based codes should generate sufficient incentive for TSPs to manage their businesses in a financially prudent manner. Furthermore, industry associations may see themselves as being able to fulfil a quasi-prudential oversight role should the industry see this as beneficial. Long-Term Model not a ‘no regulation’ model As the industry may seek to implement voluntary codes and oversight mechanisms (ie a self-regulation approach), it is not be appropriate to label the AFTA Long-Term Proposal as a ‘no regulation’ or total deregulatory approach – rather it could be labelled a ‘no mandatory regulation’ model. For example, industry associations like AFTA may seek to develop their own codes of practice to mirror some the requirements of the NTLS accreditation system. Insurance companies may see benefit in approaching industry associations to take on a prudential reporting role to assist them measure risk and set premiums for travel insurance. This could lead to a voluntary prudential oversight system. The need and incentive for these can be gauged by the benefit that is observed during the period of the Short-Term Proposal.

AFTA’s long-term model is consistent with the robust conclusions of the last major review of travel agent regulation

Consistency of AFTA Long-Term Proposal with CIE long-term recommendation In any event, AFTA notes that removal of the prudential oversight function was implicit in the CIE long-term recommendation in 2000 (CIE 2000, p 120). CIE concluded that there was an inability to demonstrate that the TCF arrangements (which include the prudential oversight role) produce net benefits. Accordingly, it recommended that a ‘voluntary’ or ‘no legislated requirements’ model be adopted in the long-term. In presenting a case for the ‘no industry specific regulation model’, CIE argued (CIE 2000, p 108): • Travel agencies would face the same market environment with no agents

being able to gain an advantage from regulation (as some do at the moment – eg suppliers and some web-based providers).

• Travel agencies would face the same market environment as other tourism businesses not subject to industry specific regulation.

• Financial costs of regulation for travel agents would be removed.



Ultimately, the existence of travel insurance would provide a final ‘safety net’ for those consumers who are unfortunate enough to suffer due to the failure of an intermediary. Benefits of the AFTA Long-Term Proposal Benefits of the AFTA Long-Term Proposal would include all of the benefits accruing from the Short-Term Proposal (noted above) plus the following: 1. Reduced compliance costs Less compliance cost for TSPs would be involved in the Long-Term Proposal as TSPs would not be required to formally report to a prudential oversight body. Reduced overheads would reduce pressure on TSPs to increase prices to consumers. 2. Efficiency Competition policy theory supposes that less intervention in markets yields more efficient economic outcomes. The removal of one further element of regulation assists in achieving less intervention. This is consistent with CIE’s conclusion that a no mandatory regulation model is the preferred long-term solution.



7 Summary of responses to Issues Paper questions

AFTA’s responses to the questions raised in the PWC Issues Paper are

contained throughout the contents of this submission in explicit or implicit terms. However, for ease of reference and for clarity, AFTA provides a short summary of its responses to the Issues Paper questions below, together with a reference to sections in the submission where more detail can be found.

Overarching themes

Issue 1: Has the scope of industry-specific regulation in the travel industry appropriately addressed the major consumer protection issues in the industry? NO. The scope of application of the current regulatory scheme has progressively reduced over the last 24 years. The outdated definition of “travel agent” and resulting narrow membership of the TCF means that the level of protection was never broad enough and furthermore has reduced over time. The nature and extent of industry innovation and development has left the regulatory regime inequitable and inefficient. This is acutely demonstrated by the only major travel services operator collapse in the last 10 years – that of Ansett. This collapse required significant intervention by the Federal and State Governments in order to provide consumer confidence and compensation, and highlights the inadequacy of the current regime. SEE further detail in Chapters 1-4.

Issue 2: Is the definition of ‘travel agent’ for the purposes of licensing appropriate? NO. The current definition of travel agent is narrow and outdated. For licensing purposes, it should be expanded to encompass a wider spectrum of “travel services providers” both now and into the future. SEE further explanation in Chapter 2 and Chapter 6.

Issue 3: What major changes have occurred in the travel industry since the introduction of the National Scheme and/or reviews of the consumer protection in the industry? What impact have they had on the appropriateness of the scheme? There have been major changes in the travel industry since the introduction of the National Scheme. These changes have accelerated and compounded in recent years since the last review of the Scheme. The extent of changes in the mode of supplier-consumer interaction, payment systems and industry make up have radically altered the industry such that the current regulatory scheme is incompatible with the realities of the industry. SEE further explanation in Chapters 1 and 4.


including the role of the Travel Compensation Fund Competency requirements

Issue 4: How effective has the current licensing regime been in promoting

good standards and behaviour in the industry? AFTA believes that the service standards and behaviour in the industry are at a more than acceptable level. AFTA believes that the licensing regime has not been the primary driver in promoting good standards and behaviour. The industry has been the main driver of this via competition and good business practices. With the broadening and consolidation of the industry under franchise and corporate brands, quality standards and behaviours have been administered and monitored via this mechanism far more than that of the licensing regime. The AFTA Code of Ethics and membership has been a key contributor to ensuring higher standards within the industry. While the licensing regime has at times been used to eject bad traders, it has been only as a result of the company in question not meeting the standards of the TCF, rather than the requirement of state based licensing.

Issue 5: To what extent does having to be licensed in each state impose additional costs on businesses operating in multiple jurisdictions? There is a substantial cost to business in multiple licensing systems across states and territories. While rules across states maybe similar, it still necessitates understanding the rules and interacting with multiple licensing agencies. Different states may also administer their rules differently, creating uncertainty and confusion. With the ever changing distribution model and greater use of the internet, state borders in the sale of travel have become ever more irrelevant. Multiple state licensing creates confusion for these types of operators and for licence holders who wish to have staff based in multiple states or for companies that have travel agencies in more than one state.

Issue 6: Are the experience/qualification requirements for travel agents appropriate? NO. AFTA believes that it is unnecessary to legislate these requirements. This aspect of industry oversight can be handled by market competition and self-regulation as is the case in many other industries.

Insolvency Protection

Issue 7: To what extent is there overlap between the regulatory requirements of the licensing framework and those for participation in the TCF? To what extent does this overlap place undue costs on business? There is extensive overlap between the licensing system and the TCF as operators have to deal with multiple authorities. At least 2 authorities (State licensing office and the TCF) have to be dealt with, and up to 9 should a business operate in all states and territories. While AFTA acknowledges that the two agencies administer two different components of the regime, efficiencies could be gained and overlap reduced if the two aspects were dealt with by the one agency – as AFTA is recommending. It is difficult to assess what the overlap would generate in incremental cost to business, however we believe it is credible to assert that the current regime is unduly burdensome and costly – see Chapter 4 for further explanation.


including the role of the Travel Compensation Fund Issue 8: Are the financial adequacy tests applied by the TCF appropriate in

light of the ongoing occurrence of travel agent failure? What can be done to improve the effectiveness of these financial adequacy requirements? NO. In the first instance, AFTA submits that the level of travel agent failure is not high (less than 1% per annum) and therefore it is not appropriate to apply significant regulatory oversight to a stable industry. Secondly, AFTA believes that there is a more efficient way to apply a prudential oversight role – see Chapters 4 and 6 for further explanation.

Issue 9: Is the cost burden on business in complying with TCF requirements appropriate and proportional? NO. AFTA maintains that the TCF regime is an excessive and inefficient impost on industry. Given the relatively stable nature of the travel agent industry and the changes in industry structure and practices over the years (ie less instances of monies at risk and monies at risk for a lesser time period for example); AFTA believes that the TCF is a disproportionate, costly and inappropriate approach to industry regulation. See Chapter 4 for further explanation.

Issue 10: Is the current rate of failure amongst travel agents acceptable? Obviously, any level of failure by any business that leaves customers or suppliers exposed is not acceptable. However, as noted above, AFTA observes that the rate of failure by travel agents is low and less than 1% of total industry numbers. We understand that this is in line with general economy wide benchmarks. See Chapter 4 for more information.

Issue 11: What benefits do consumers gain from the TCF in addition to compensation in the case of failure (eg confidence, advocacy)? AFTA believes that there is minimal added benefit that consumers obtain from the TCF over and above the compensation measures. The only time a consumer is fully aware of the benefits of the TCF is when a claim is made. AFTA accepts that consumers may gain intangible benefits such as piece of mind that they have a method of recouping costs if an agent fails, however broadly we believe this only occurs at the time of requiring compensation. We believe that there is high degree of misunderstanding of when a right for compensation arises from the TCF and that the general awareness of the TCF amongst consumers is low. (The only external advocate for the TCF is the travel agent who displays the TCF sticker in their window which attracts very little if any attention). When other mechanisms such as chargeback and travel insurance are also factored in, we suspect that there is confusion regarding what benefit exists for consumers.

Issue 12: Is the TCF’s funding structure appropriate? Given AFTA’s reform recommendations include disbanding the TCF; we believe that it is not appropriate to respond directly to this question. There have been some suggestions that the TCF should move to a risk based funding model. The approach taken to risk in the latest recommendation AFTA believes is flawed. The approach has not addressed real risk of failure,



rather it has focussed on the need to maintain funding. Membership contribution/fee proposals have reflected size of operator, rather than necessarily the inherent risk of the operator.

Issue 13: To what extent can reliance be placed on credit cards’ chargeback mechanism to provide ongoing consumer protection? Given the extent of usage of credit and debit cards to purchase travel services (which can access the chargeback facility), we believe that a large proportion of risk exposure for consumers is managed through the chargeback mechanism. Furthermore, because credit card sales of airline tickets are often transacted on the airline’s merchant facility by the travel agent, this removes the consumer’s exposure in relation to agent failure. See Chapter 2 for further information.

Issue 14: Are there reduced instances of travel agents holding customers’ cash (for example, on deposit or in trust)? Has this materially altered the risk exposure to consumers from travel agents’ insolvency? AFTA has not conducted any analysis of trends in holding of cash. However, we make the general comment in relation to airline tickets that with a 14 day settlement period under the IATA Billing Settlement Program (BSP) that there is a very limited period of time which agents hold funds. In addition, there is the general trend of consumers not to use cash for travel services and to use credit and debit cards (the RBA says this occurs in 62% of cases). Hence, this reduces the consumer’s exposure given the existence of the chargeback mechanism. See Chapter 2 for further information.

Issue 15: Is it likely that the private sector can provide effective and affordable travel agent insolvency insurance for travellers? What are the risks of leaving such insurance to the private sector? Given the tendency of the competitive market to offer products which consumers demand and the pre-existence of supplier insolvency insurance in comprehensive travel insurance products, AFTA believes that there is a likelihood that insurance companies would step in to provide this product. In addition, the low risk of failure in the industry and our suggestion that an industry body provide prudential oversight we believe should provide encouragement to the insurance industry to come forward with this product. There is a risk if the insurance dimension is not subject to some form of oversight or regulation that direct selling insurance providers and budget policies could enter the market resulting in the consumer paying for inadequate or inferior cover. SEE Chapter 6 for further information.

Conduct requirements

Issue 16: Do the provisions of the Trade Practices Act and state-based Fair Trading Acts provide sufficient consumer protection in relation to the supply of travel and travel-related services? If not, in what way are the Trade Practices Act and state-based Fair Trading Acts inadequate? The existing TPA and State-based Fair Trading Acts provide an adequate level of generic protection to consumers in the travel services market. Ongoing reform and harmonisation of this legislation (eg Australian Consumer Law) has provided an opportunity to strengthen and harmonise existing areas that may have been lacking.



While these Acts provide a general level of protection, they are not specific or adequate enough to address the two dimensions of regulation that AFTA has outlined in this submission. AFTA believes that there is the need for supplementary regulation, whether that be through co-regulation or self-regulation, to address the consumer protection issues that exist in the travel services market. See Chapters 2 and 6 for further information.

Issue 17: Are the self-regulation measures outlined in the Aviation White Paper likely to provide adequate consumer protection in the aviation industry? Should these measures be extended to travel agents? The self-regulation measures recommended by the Aviation White Paper should strengthen consumer rights and protection in relation to airline ticket purchases. Encouraging airlines to be clear in their dealings with customers and complaints, and providing enforcement mechanisms through an ombudsman, will heighten the level of protection available to consumers and provide a clear understanding of rights and obligations. In relation to the Ombudsman proposal, care should be taken to ensure there is no duplication or overlap with functions carried out by the Fair Trading Offices. AFTA would be happy to consider extending these provisions to the travel agent sector and has highlighted the role of an industry code of practice in both its short-term and long-term reform proposals in Chapter 6.

Issue 18: What conduct requirements are necessary to adequately protect consumers? AFTA recommends that, in the short term, travel services provider conduct be regulated under a co-regulatory scheme through a combined licensing/accreditation system (underscored by a Code of Practice). In the long term, we anticipate that these provisions would be incorporated into a self-regulatory code of practice for the industry. See Chapter 6 for further explanation.

Issue 19: To what extent do the conduct requirements of the various licensing schemes duplicate the provisions of the Trade Practices Act and Fair Trading Acts? Does this duplication improve compliance? AFTA believes there is some degree of duplication between the generic consumer protection provisions of the TPA and the Fair Trading Acts, notably in the area of unfair or unjust conduct. AFTA recommends that in drafting the new uniform legislation recommended in this submission that regard be had to existing generic protection provisions to ensure there is no unnecessary duplication. See Chapter 6 for more information.

Issue 20: What role do industry association codes of ethics play in ensuring good conduct by travel agent businesses? Are they sufficient to ensure good conduct? The existence of self-regulatory regimes that encompass industry codes of practice demonstrate that these mechanisms do have a role in enforcing behavioural standards. AFTA’s proposals, both short and long-term, integrate a role for industry codes of practice. In the short-term proposal, AFTA recommends that the industry accreditation system, to be linked to the licensing system, will be underscored by an industry code of practice. In the long-term, AFTA envisages that an industry code of practice will continue to operate under the proposed self-regulatory regime. See Chapter 6 for further



explanation.

Possible reform options

Issue 21: What are the appropriate means for ensuring adequate consumer protection in each of the three categories (competency, insolvency protection, conduct)? AFTA believes that a co-regulatory approach in the short term to address competency and conduct, supplemented by travel insurance to address consumer protection, is the appropriate response to drive a new regulatory regime for consumer protection in the travel services market. In the longer term, AFTA recommends a move to a self-regulatory approach, supplemented by travel insurance. See Chapter 6 for a full explanation of AFTA’s recommendations.

Issue 22: What are the key issues associated with the implementation of any regulatory reform in this industry? Are there any barriers to reform? If so, what are they? The key issues associated implementation of regulatory reform are: • To gain agreement from all States/Territories regarding a recommended

approach. This can be addressed through MCCA and SCOCA, following stakeholder consultation from this review.

• To reassure consumers regarding the nature of the reform and give them adequate time to understand and prepare for change. Likewise, industry will need adequate time to prepare for any compliance changes.

• To develop new agreed standards of industry conduct and to ensure they are realistic and practical at the same time as giving the required degree of consumer protection.

Barriers to reform could include: • Consumer, industry or political resistance to reform. AFTA’s

recommendation for an interim ‘safety net’ arrangement should assist mitigate any consumer and political concerns regarding the move to AFTA’s short term reform proposal.

• Difficulty in reaching agreement regarding new licensing and accreditation standards.

• Complications obtaining support from the insurance market for the provision of intermediary insolvency protection should an appropriate regulatory system not be developed as the insurance industry builds its capability in this market.

Regulators will need to develop a risk mitigation plan to assist them address the barriers or impediments o reform. AFTA could assist with development of this plan.


including the role of the Travel Compensation Fund Bibliography Australian Bureau of Statistics 2009 (ABS 2009a), Tourism Satellite Account 2007-08 (Catalogue 5249.0), April 2009 Australian Bureau of Statistics 2009 (ABS 2009b), 2008-09 Household Use of Information Technology Australia, December 2009 Australian Federation of Travel Agents 2009 (AFTA 2009a), Discussion Paper: Better Regulating Travel and Travel-Related Services, August 2009 Australian Federation of Travel Agents 2009 (AFTA 2009b), Aviation Green Paper – Comments by the Australian Federation of Travel Agents, 2009 Australian Federation of Travel Agents 2005 (AFTA 2005, unpublished), Better Regulating Travel Related Services, July 2005 Centre for International Economics 2000 (CIE 2000), Consultative Draft National Competition Policy Review of the National Scheme for the Registration of Travel Agents, August 2000 Council of Australian Governments 2007 (COAG 2007), Best Practice Regulation, A guide for Ministerial Councils and National Standard Setting Bodies, October 2007 IBIS World Industry Report 2009 (IBIS 2009), Travel Agency Services in Australia, April 2009 Office of Best Practice Regulation 2007 (OBPR 2007), Best Practice Regulation Handbook, August 2007 Pricewaterhouse Coopers 2010 (PWC 2010), Issues Paper, Review of consumer protection measures in travel and travel related services market in Australia, February 2010 Reserve Bank of Australia 2009 (RBA 2009a), Research Discussion Paper: Price incentives and consumer payment behaviour Reserve Bank of Australia 2009 (RBA 2009b), Payment System Board Annual Report 2009, 2009 Travel Compensation Fund 2009, (TCF 2009), Annual Report 2008 Travel Compensation Fund, March 2009 Travel Compensation Fund 2006, (TCF 2006), Financial Criteria and Reporting Requirements, June 2008 Travel Compensation Fund 2004, (TCF 2004), Joint Working Group’s proposals, Future directions for the Travel Compensation Fund, Post-consultative paper, April 2004

AFTA submission to Ministerial Council on Consumer Affairs R


eview of consumer protection measures in the travel and travel-related services market

Attachment 1: Consumer Protection in the Travel and Travel-Related Services Industry Policy Option Reform Map – general view

AFTA submission to Ministerial Council on Consumer Affairs eview of consumer protection measures in the travel and travel-related services market R


Attachment 2: Consumer Protection in the Travel and Travel-Related Services Industry Policy Option Reform Map – AFTA’s reform proposals mapped

“Without a travel agent, you are on your own”

The Australian Federation of Travel Agents Level 3/309 Pitt Street Sydney NSW 2000

Telephone: 02 9287 9900 Facsimile: 02 9264 1085

Website: www.afta.com.au

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