Travel agents and airline refunds
Deputy Lowry warns travel agents are facing extinction and says passengers are being exploited by airlines when flights are not cancelled. The Tánaiste says he will engage with the ITAA, meet representatives, and raise the issue with airlines while restating travel advice and movement restrictions.
Although there is a major focus on travel, a sector of the industry is facing extinction unless they receive urgent funding. Ireland's 190 licensed travel agents are currently watching their businesses fail and, unlike other SMEs, they have received little or no assistance. I have been in correspondence with the Tánaiste about this issue. Industry projections estimate that as a result of the advice not to travel abroad, travel agents will lose €120 billion in projected earned income, which comes largely from commissions and service fees. Without the benefit of the temporary wage subsidy scheme, TWSS, many travel agents would already have closed their doors as turnover is down by 90%. All income earned to date from advance bookings is handed back in refunds, resulting in negative trading. Advance bookings are practically at zero so businesses are looking down a black hole toward the rest of 2020 and the first quarter of 2021. Travel agents earn income when consumers pay the balances. Unlike the domestic tourism industry, they cannot benefit from staycations to any great extent. Outbound travel agents have no fallback. However, outbound and inbound tourism rely on each other to generate passengers for airlines to justify operations. Multinationals and SMEs depend on travel agents to properly manage their costs. Outbound travel agents also sell European holidays in the UK market and bring meetings, conferences, sports groups and a host of other visitors into Ireland.
Travel agents are not arguing against Government advices but they are concerned about the unintended consequences that are putting them in jeopardy. Greater assistance is urgently required. Travel agents were excluded from applying for the online retail scheme in the first round of grants as they were considered to be providing a leisure service. Travel agents should not be excluded from the upcoming round of financial supports for SMEs or from applying for certain grants that may evolve due to a misconception about the volume and type of business they provide.
In summary, the Government advice is not to travel. Thousands of people have followed that advice by cancelling holidays. Most of these cancellations are package holidays that include flights, transfers and accommodation. We have a ludicrous situation where under a EU directive the travel agent is legally responsible for the refund of the entire package. This is simply not sustainable financially. It is a travesty and incredibly unfair to expect travel agents to shoulder the burden of this financial outlay. It will force them into liquidation. Ironically, the travel agent bonding system to protect consumers when agencies collapse only becomes active and effective after a travel agency goes into liquidation. Travel agents, and thousands of consumers across Ireland are stranded between a EU directive and Government travel advice. This matter requires urgent attention and correction.
Comment on this
I had a chance to speak briefly to the president of the Irish Travel Agents Association, ITAA, on a Zoom call the other day. The Minister of State, Deputy Hildegarde Naughten, whose responsibilities cover aviation and international travel will meet ITAA representatives in the next couple of days to explore what specific supports we may be able to put in place for them.
Approximately 3,000 people work in travel agents and tour operators throughout the country. We all know these businesses and they are largely locally-owned, often family-owned. They tend to be an important feature on our high streets. While many people now book online, lots of people still use travel agents and tour operators, and that includes inbound as well as outbound travellers. We want to make sure that they survive and that they are able to do well again when we get past this pandemic. They benefit from the actions already put in place by Government including, for example, the wage subsidy scheme. Almost all of them would benefit from that because their turnover has gone down by so much. We also brought in the refund credit note scheme so that people would get vouchers or credit notes rather than cash refunds in an effort to assist the sector so that it did not collapse, although people are ultimately entitled to the cash if that is what they want. Their commercial rates have been waived and some are eligible for the restart grant once they get started again. We will see what else can be done with both through the July stimulus fund that is happening next week and also if there is anything in particular we can do for the sector. That is what the Minister of State, Deputy Hildegarde Naughten, will explore with them.
The Deputy wrote to me about the online retail scheme, which falls under my responsibility as it is an Enterprise Ireland scheme. That funding has all been drawn down, but if we able to reopen the scheme, I take the Deputy's valid point that they should be included under that as well.
Comment on this
I wish to raise a separate but connected issue. Thousands of people booked flights with airlines. On Government advice, they have taken the decision not to travel. We now have a situation where airlines have had the use of people's money for a considerable period. However, because the flights have not been cancelled, they are unable to recoup their money. The only option they have is to change the date and when they move to do this, the airlines are charging them as much they paid for the original ticket. This is total exploitation by the airlines of their dominant position. Will the Tánaiste intervene with them to allow a situation to develop where they only charge a nominal fee for moving the booking forward?
Comment on this
I will certainly take that up in my engagement with the major airlines. The Government advice since the middle of March has been to avoid non-essential travel off the island but I appreciate that there are some people who made bookings long before March and now find themselves in a very difficult position. On the international travel advice, I restate that nobody should engage in non-essential travel off the island and anyone coming in for reasons essential or otherwise should, not quarantine as such, but restrict their movements for 14 days. That means staying at home and only going out for essential supplies and exercise. I regularly see the terms "quarantine" and "self-isolate" used incorrectly. The advice is for a person to restrict their movements for 14 days. That applies to anyone coming to the island with a very small number of exceptions such as pilots, transport workers, cabin crew and diplomats. On Monday, however, we will have a green list of countries that have an incidence of coronavirus that is similar to ours. We will then be able to update our advice on those countries and it will be different from the general advice for countries not on that list.