Dear travel professional,
Where did it all go wrong? For years the travel industry spearheaded financial protection with a simple message: “Book with an ATOL bonded tour operator, via an ABTA bonded travel agent, and your money is 100% safe”.
In today’s tough times this could not be further from the truth. Caveat emptor (let the buyer beware) has become the industry’s new slogan.
Weak government lies at the heart of the problem. The powerful British Airways lobby means that if customers fly on scheduled or low-cost airlines they supposedly need no protection, but if they step on an otherwise identical holiday flight they require a Government backed scheme called ATOL.
The internet has muddied the waters further by creating dynamic packages. These holidays are identical in every way to the traditional tour operator’s, flying from the same airports, to the same destinations and hotels. Yet due to another farcical legal twist they do not require financial protection.
In a landmark legal case between ABTA and the Civil Aviation Authority, the judge ruled that buying a holiday was like going to the supermarket – if you pick up your flight on one aisle, your hotel on the next, and so on, it doesn’t necessarily package requiring ATOL protection.
The collapse of XL Airways got extensive media coverage, but it is the failure of Freedom Direct that will really rock consumers’ confidence in protection schemes. Many holidaymakers have been left unprotected even though Freedom was both ATOL and ABTA bonded.
To add insult to injury, ABTA rules have been quietly changed and no longer protect customer’s monies whilst held by travel agents. ABTA are telling customers that their overseas hoteliers have to honour the booking under agency law even though they have not been paid. Try checking in with that one.
ABTA are well aware that virtually all bed banks’ terms and conditions are designed to protect them from the collapse of an agency. They do this by stating very clearly that reservations only become bookings when agents pay over the customer’s money.
The problem is that ABTA no longer protects this pipeline money when one of its agencies collapses, and is seeking to duck out of its responsibilities by blaming bed banks.
If ABTA persists with this route bed banks will have to follow the big operators and force agents to pass over all customer monies as soon as they are received.
Alternatively, they will be forced to stop supplying ABTA members unless customers’ monies are held in a trust fund. It is simply not reasonable to expect hotels to refund monies they have received or honour bookings that have not been paid for.
A simpler solution may be for ABTA to put its own house in order and introduce a compulsory insurance scheme that covers the collapse of agents and pipeline money. After all, if the association does not do what customers think it does – i.e. protect their money – its own name will be the one dragged through the mud.
Steve Endacott
CEO, On Holiday Group
Do you agree? Dicuss it on the travelhub forums