The New South Wales Minister for Fair Trading and the Victorian Minister for Consumer Affairs are well advanced to abolish travel agents licensing as of 30 June 2014.

Travel Agents Repeal Bills were introduced into parliament on 13 November 2013 (Victoria) and on 14 November 2013 (NSW). The other states and territories are in to process of repealing their Travel Agents Acts. The States and Territories are repealing their Travel Agents Acts following upon the Travel Industry Transition Plan which they approved on 7 December 2012. 

And so the sun will set upon travel agents licensing in Australia as of 30 June 2014, and upon the Travel Compensation Fund by 31 December 2015.

Travel Agents licensing began in Australia in 1974, in NSW, after a spate of travel agency collapses which left travel consumers stranded for travel arrangements they had paid for. A Travel Agents Act, 1973 (NSW) was introduced which licensed travel agents. It required travel agents to deposit all money received from their clients into a trust account, with strict rules on payments out of the trust account.

In 1986 and 1987, travel agents licensing spread around Australia (except for the Northern Territory). Each State decided to introduce its own Travel Agents Act, in similar terms. Instead of requiring travel agents to have a trust account, the States introduced an Australia wide body, the Travel Compensation Fund (the TCF), which they administered. The TCF effectively insures travel consumers against a travel agent’s default in passing on money received to suppliers. Membership of the TCF is compulsory as a condition of holding a Travel Agents Licence.

It is fair to say that the TCF imposes ‘a red tape burden’ in terms of posting substantial security bonds with the TCF and requiring audited accounts annually. This represents a substantial cost and an administrative burden on the 99% of travel agents who look after their clients’ money properly.

Travel Agents Licensing and Travel Compensation Fund claims will end on 30 June 2014

In introducing the Travel Agents Repeal Bill 2013, the NSW Minister (Anthony Roberts) said this about the abolition of the TCF:

“Given that payments are now frequently made directly to travel providers and/or by credit card, the Travel Compensation Fund and licensing has become increasingly redundant. The regulatory scheme has placed a costly administrative burden on the industry.”

‘Increasingly redundant’ is an apt description. These days, money paid to a travel agent hardly has time to clear before it must be paid to suppliers – the IATA BSP being a prime example.

The TCF will not accept claims for losses arising after 30 June 2014. The Government expects that ‘a voluntary industry accreditation system will commence in mid-2014’ and that ‘commercial solutions will be developed to address business insolvency’.

Consumer Protection

Strangely enough, the Travel Agents Acts have never contained any other consumer protection provisions. The Acts do not contain warranties of due skill and care in making travel arrangements, there are no prohibitions on misleading and deceptive advertising, no transparent pricing requirements, no guidelines to allowable deductions from refunds and so forth. These were left to State Fair Trading and Consumer Protection laws.

As the NSW Minister said about the Travel Agents Repeal Bill 2013:

“The internet and e-commerce have transformed the way consumers purchase flights, hotels, tours and other travel related products. The 1986 Travel Agents Act is based on an outdated concept of how this industry operates. The Australian Consumer Law, which commenced on 1 January 2011, has much more relevance to consumer travel purchases both now and into the future.”

The ACCC has published The Australian Consumer Law Guide for the travel and accommodation industry to assist and inform the industry on its obligations to consumers.

‘Outdated concept’ is an apt description. Despite the best efforts of the TCF to expand its reach beyond its core of travel agents and tour operators, to wholesalers and providers of travel related arrangements, it has failed to reach across the travel industry, particularly the suppliers, in any meaningful way. A good example was the collapse of Air Australia in February 2012, where no TCF coverage was available to passengers who were left stranded in Australia and overseas.

Conclusion

The future is therefore market-based, not government controlled, for travel agents. Travel agents will be subject to the same consumer protection laws as any other business in Australia.

As the NSW Minister said in conclusion:

“The well-considered transition plan replaces largely redundant institutions and approaches in favour of market-based mechanisms capable of accommodating all parties’ needs for future travel transactions.”

[All quotations are taken from the second reading of the Travel Agents Repeal Bill 2013 (NSW) on 14 November 2013]