Canadian travel agents bear the brunt of consumers’ ire when they find out about airline-imposed extra charges on their airfares. That’s a major reason why the Association of Canadian Travel Agents (ACTA) welcomes Canada’s all-in airfare advertising rule, which is likely to take effect in 2013.
The new rule will “level the field” for agents, ACTA president and COO David McCaig said in a conversation with Travel Market Report.
What else are top concerns for Canada’s travel sellers for the year ahead? Merchant card fees and IATA charges are among their major issues, McCaig said.
On the positive side, he noted that Canada’s agents benefit from travel-related consumer protection laws in some provinces.
How will the Canadian government's all-in airfare advertising requirement affect the way agents do business? Why do you think this is important?
McCaig: In Canada, we have many situations where the consumer walks out with an invoice that includes a ‘tax,’ only to later find out that it is a fuel surcharge. Our travel agents end up taking the abuse for this airline policy when the consumer finds out.
That’s why we are very pleased that the federal government in Canada is bringing out these regulations. This will level the field for all agencies.
ACTA has been working for 10 years to get federal legislation requiring all airlines and players – including tour operators and travel agents – to advertise with full disclosure and all-in pricing.
Under provincial travel consumer protection regulations in Ontario and Quebec, tour operators already have to have all-in price advertising. But this regulation has to be for all of Canada and all players involved with selling air tickets, whether they are travel agents, tour operators or airlines.
Are the provincial consumer protection regimes good for travel agents as well and why?
McCaig: The consumer protection regulations in British Columbia, Ontario and Quebec are a real advantage for travel agents in those provinces, which together account for approximately 80% of the Canadian travel market.
Each province has a consumer protection fund to cover consumers if a tour operator or travel agency fails.
But consumers are covered only if they have booked through a regular travel agency and they are not covered when they book directly with the supplier.
It is a big advantage for agencies to be able to inform clients that their losses will be covered if there is a failure.
What’s the situation for agencies in unregulated provinces?
McCaig: We have ACTA members in Atlantic Canada, Alberta, Manitoba and Saskatchewan that don’t have travel consumer protection funds. So they are open to competition from travel agencies in the provinces that do (have protection); they advertise that advantage to local customers.
ACTA continues to work with the unregulated provinces in various ways.
What IATA issues are affecting Canadian agents?
McCaig: IATA is still seeking to increase its fees around the world, and ACTA is negotiating with them via World Travel Agent Associations Alliance (WTAAA) as the largest collective contributor of airline sales processed through the various global settlement plans.
The other issue ACTA is working on with IATA is addressing credit card fraud, because agencies are being defrauded. I know of one Canadian agency recently taken for $68,000, which is a big issue for a small business.
Is ACTA doing anything about this fraud?
McCaig: We are involved in bringing in some new systems to help prevent ticket fraud, such as the Perseuss collaborative database of fraudulent PNR data from over 80 airlines and travel suppliers, which has successfully prevented thousands of fraudulent bookings.
You mention that credit card merchant fees are another major issue for Canada’s travel agents. Why?
McCaig: High merchant fees and the security requirements for an agency to have a merchant credit card are a big issue, especially with U.S.-based banks. This is also an issue for our tour operators and for airlines.
One Canadian agency doing $3 million a year was required to put up $100,000 in security as part of the merchant service agreement, but we were able to switch her over to Canada-based SecuTrans with much better terms.
Still, the U.S. bank kept that $100,000 for 365 days, in case there was a claw back, even though there hadn’t been a claw back for 30 years and every passenger booked with the agency had traveled.
What is ACTA doing to address merchant credit card security?
McCraig: We are working with the Canadian Independent Federation of Businesses (CIFB) as a lobby group with the federal government to help travel agencies – and other small businesses – with the whole issue of merchant card security requirements.
That’s in addition to the SecuTrans merchant card service that we provide as a value-add to ACTA members.
How did merchant card fees become such a problem?
McCraig: The high merchant card fees resulted from what has happened in the U.S. banking industry during the recession, combined with the negativity around travel agencies and the travel industry after the Sept. 11, 2001, attacks, leading to the travel industry being classified as risky.
We find it hard to convince a bank in the U.S. that we have consumer protection laws in Canada and consumer compensation funds. The U.S. banks don’t understand that three provinces in Canada have that compensation fund that is the backup for consumers in case of a failure. It is difficult message to get across.
What has been the overall impact on Canadian agencies?
McCraig: Canadian agencies need to be well-capitalized.
The result is that we are having a number of mergers, which is healthy for the agency industry, because the merged agencies are well-capitalized and have the resources to implement the technology that is driving the travel market.