For years, the travel industry was regulated and safe for travellers, but things have become shamefully lax in recent years. Picture: AFP/Daniel Roland
For years, the travel industry was regulated and safe for travellers, but things have become shamefully lax in recent years. Picture: AFP/Daniel Roland

Self-regulation works really well in utopias

THERE was that time we arrived at the airport for an international flight and as we approached the ticket counter, I asked my wife for her passport.

There followed what could only be described as a pregnant pause that shortly thereafter gave birth to an unladylike expletive. It was still sitting on the kitchen bench.

We made the flight but it was a close-run thing.

There is no takeoff in sight, however, for the customers of online travel provider Bestjet which collapsed in the dying days of 2018, dampening their Christmas celebrations and trashing their holiday plans.

It's likely that thousands will lose their money, but surely there must be a mechanism in place that protects consumers from online travel companies that overnight, disappear into the clouds?

Well, there used to be and it was called the Travel Compensation Fund. Under this scheme, travel agents posted security bonds and every year made a monetary contribution and provided audited accounts.

The fund ceased to operate on July 1, 2014, following pressure from the travel industry which claimed that the scheme imposed an administrative and financial burden on agents.

Getting stranded at the airport with worthless tickets is now a possibility thanks to a self-regulating industry. Picture: iStock
Getting stranded at the airport with worthless tickets is now a possibility thanks to a self-regulating industry. Picture: iStock

The industry's lobbyists did an excellent job of blowing in the ear of our state governments and you would have to wonder why no one stopped for a moment and thought: "Hang on. If I support this, then I am saying that travel agencies and travel companies are such rock solid businesses that from this date forward, none of them are going to fold and leave Mum and Dad standing at the airport clutching worthless tickets."

Maybe there were those who harboured such doubts. If so, they didn't voice them.

There is also the question of operating licences. You may think that you need a licence to open a travel agency. Well, no you don't but it was not always so.

Prior to the dumping of the Travel Compensation Fund, travel agents had to be members of the fund and to do so, had to have a licence to operate.

Once it was scrapped, there was no longer a requirement to hold a licence and the industry was left to self-regulate.

Upon hearing the term "self-regulate", it is generally in the best interests of consumers to run home and lock themselves in the bathroom.

Self-regulate works just fine in a world filled with honourable men and women, and if you ever find such a place, please let me know.

In 2017 ACCC chairman Rod Sims announced theConsumer Commission would take Ford Motor Company of Australia to federal court over its handling of customers who had problems with their vehicles. Picture: AAP/Dan Peled
In 2017 ACCC chairman Rod Sims announced theConsumer Commission would take Ford Motor Company of Australia to federal court over its handling of customers who had problems with their vehicles. Picture: AAP/Dan Peled

The reality in the real world in which we live is that the profit motive tends to override such lofty considerations as doing the right thing by the customer.

If you want an example of this, look at the motor vehicle industry which also self regulates. Car buyers are not protected by specific "lemon laws" and face lengthy, soul destroying battles to have defective vehicles replaced or repaired free of charge.

Last year Ford Australia was hit with a record $10 million fine by the Australian Competition and Consumer Commission for "unconscionable conduct" for failing to fix faulty transmissions on 10,500 cars made between 2011 and 2015.

If you bought one in 2011, it was a long wait.

Self regulation, then, is a rosy concept which in reality means the stating of virtuous aims by a self-appointed industry body which are completely unenforceable.

When governments decided to acquiesce to the entreaties of the travel industry and abandon the Travel Compensation Scheme and consumers with it, a new scheme came into being.

Operated by the Australia Federation of Travel Agents (AFTA), it is called ATAS for AFTA Travel Accreditation Scheme.

Australian passengers were stranded in Denpasar after a volcano eruption. Picture: Komang Erviani
Australian passengers were stranded in Denpasar after a volcano eruption. Picture: Komang Erviani

Agents are not compelled to have ATAS accreditation and AFTA has no authority to enforce standards against agents that aren't accredited. Nor are agents who are accredited with ATAS under any obligation to have insolvency insurance to protect their customers if their business heads south.

I'm not suggesting that the industry is populated by shonks. Far from it. I've rubbed elbows at countless functions with agents, consuming my body weight in canapes in the process and found most of them to have the interests of their clients at heart, but companies do fail and they will continue to do so and it's the consumer who most frequently loses out.

Bestjet was a member of ATAS but had its accreditation withdrawn by AFTA in 2016.

The sole director of the airline was Rachel James, wife of Michael James, the former CEO of Air Australia that collapsed in 2012 leaving travellers stranded and debts of $97 million.

It seems that the present system offers little protection for travellers and that it is time to revisit a travel compensation scheme.

In the absence of such a scheme AFTA advises travellers to pay with a credit card. This means you pay the credit card surcharge but can ask the credit card issuer, most likely your bank, to reverse the charge if the travel you paid for can't be provided.

There are too many flaws in the current system. A licensing and compensation scheme might be an impost on the industry but it would boost the travelling public's confidence in travel agents and provide a positive outcome for all parties.

Mike O'Connor is a Courier-Mail columnist.



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