The Association of Canadian Travel Agencies (ACTA) launched a lobbying campaign in 2018 to have the Ontario government relieve some of the financial and administrative burdens imposed on travel agencies under the Travel Industry Act (TIA). Now after more than a year of aggressive lobbying, ACTA is seeking support from agents within the travel industry to help bring necessary legislative reforms to TIA and the Travel Industry Compensation Fund.
TIA spearheads the Travel Industry Compensation Fund, which provides reimbursement to customers in the event that they paid for travel services that were not provided, and the payment was made to or through an Ontario registered travel agent who could not provide reimbursement due to bankruptcy or insolvency.
The Fund is financed by registered travel agents and wholesalers in Ontario, and is administered by the Travel Industry Council of Ontario (TICO), of which the board of directors determines whether a claim meets the requirements.
ACTA has argued that the Compensation Fund model is outdated, ineffectual, and would place undue financial burden on travel agents. In the fall of 2018, ACTA formed an industry coalition with the Canadian Association of Tour Operators (CATO), and hired a lobbyist to bring their concerns to the government of Ontario.
Among the complaints ACTA has leveled against the legislation, the Compensation Fund does not work for consumers. It is confusing and has many limitations and delays before paying, and is the payer of last resort. TICO has a policy of forcing the consumer to first request a charge-back if payment was made by credit card or request reimbursement from a travel insurance policy.
The Compensation Fund is also not based on any kind of risk profile. There is no perceived benefit from the Compensation Fund for corporate travel agency clients, despite paying significant amounts into it.
An obsolete model
During a Travel Industry Act trade media Q&A session last week, Richard Vanderlubbe, chair of ACTA Ontario and long-standing member of the TICO board, discussed the need for legislation reform. He cited the history of the travel industry Compensation Fund, and how the shifting priorities and practices within the industry have rendered it obsolete.
Originally, the Travel industry Act came into effect on Dec. 20, 1974, after the failures of several charter operators. Back then, travelers paid using cash or checks, with very few purchasing with credit cards. They would pay the travel agent, and in turn, the agent paid the airlines.
But over the years, as more air travelers preferred to reserve their own airline tickets and paid using credit cards, it became more difficult to reimburse them fully and in a timely manner.
“It was designed in the 1970s, when consumers paid by cash or checks, before the internet and e-commerce. Today, well over 90% of travel agency transactions are completed using a credit card, making travel agency bookings a much lower risk,” said ACTA in a statement. “It is an unfair financial and administrative burden on Ontario travel businesses, creating a disadvantage for Ontario travel companies and making them uncompetitive in a global market.”
Currently, airlines and cruise lines are financing operations with advance customer monies, which is exactly what the 1974 Travel Act was trying to prevent for Ontario travel businesses. Now the Compensation Fund is covering airlines and cruise lines without their contributions or conformity to financial regulations.
The Compensation Fund currently sits at more than $23 million, but according to an actuarial study conducted for TICO, the Fund should be at $50 million. ACTA fears that if a consumer pay model is not adopted, such as the one used in Quebec, over time, Ontario travel companies will have to contribute a lot more than they do already.
“The message to every government official has been clear: The status quo in Ontario is not effective or sustainable, and places an unfair burden on Ontario travel companies, as well as offering very little meaningful protection to Ontario consumers,” said Wendy Paradis, president of ACTA. “We need to adopt a funding model similar to Quebec for funding consumer protection.”
What travel agents can do
As part of this ongoing campaign, ACTA is urging travel industry professionals to support a letter writing campaign to their MPPs and the government of Ontario, asking them to support adopting a similar funding model as Quebec.
“All travel agency owners should be paying attention, and we need their help at the grassroots level,” said Paradis. “In our meetings over the past several months, it became clear that many MPPs have never heard of TICO or the Ontario Travel Compensation Fund. We need to get relief for travel agencies from this archaic and inadequate piece of legislation. Reform is essential, or travel agencies will just continue paying more and more.”