Relaxation Guaranteed
Sun Herald
Sunday October 26, 2008
Know how to protect yourself when travel companies go bust, writes Jane E. Fraser.
Headlines about travel company collapses and stranded passengers are the stuff of nightmares for travellers.That nightmare became reality for tens of thousands of British travellers last month when Britain's third-largest holiday package provider, XL Leisure Group, collapsed.An estimated 80,000 travellers were already on holiday when the collapse was announced, while another 200,000 were booked to travel with the company.For Australians, it has no doubt brought back memories of the Ansett collapse in 2001. Some Ansett passengers got their money back, while others were left out-of-pocket.With tough economic times ahead, now is a good time to learn how to protect your money when booking travel. Don't blithely assume someone will bail you out or your insurance company will cover you - it is unfortunately a lot more complicated than that.The good news for Australian travellers is we have one of the best consumer-protection schemes in the world. The bad news is that it is not perfect and does not cover every situation.Consumer protection for Australian travellers is provided by the Travel Compensation Fund (TCF), to which all travel agents must belong in order to have a licence.Lesson No. 1: Deal with a licensed agent. The annual fees travel agencies are required to give the TCF as part of their licence conditions provide protection for consumers in the case of financial collapse.The TCF can either reimburse travellers or pay for alternative arrangements, particularly if their trip is already under way.The TCF typically pays out about $2 million to travellers each year, although that soared to $5.5 million last year due to a couple of large companies folding. Licensed agencies can include bricks and mortar agencies, internet agencies and travel wholesalers who package up tours.Lesson No. 2: There is no coverage for air fares unless as part of a holiday package.This has been a bone of contention within the travel industry for years, with airlines either operating outside the TCF or being in the TCF only for their travel-agent-type activities.If you book flights as part of a package, say with accommodation included, then TCF protection applies but if you book flights alone, there is no protection. It was this situation that saw some Ansett passengers (those who had booked packages) compensated, while others (those who had booked flights alone) were not.TCF chief executive Glen Wells says: "You have to buy a package to be protected. The fund just doesn't have the resources to cover airlines. Some people think the TCF is an insurance company but it's not."Wells says it is important for travellers to understand that while the TCF is a consumer-protection scheme, it is funded by travel agencies. It only covers those who act as agents, taking money from the consumer to pass on to a third party. "If it is your own product [that you are selling], you don't have to be a member," he says.Lesson No. 3: You are not covered if you book direct with a supplier, unless that company is acting as a licensed travel agent as well.A good example would be a cruise company that does not have to be licensed to sell its own cruises direct to the public but does need a licence if it sells flights, accommodation or other components in addition to the cruise.If you book a cruise alone and the cruise line goes bust, you will be out of pocket.Lesson No. 4: The chances of getting a travel-insurance payout are slim."There are not many insurance policies that protect you for insolvency," Wells says.He advises travellers to check the small print of travel-insurance policies carefully and look for those that do provide insolvency cover.Lesson No. 5: Book with a credit card.Wells says this is one of the best ways of protecting your money, depending on the conditions of your card provider. In most cases, you can apply to have a transaction reversed when you do not get the goods you paid for.In the case of a collapse, consumers are usually advised to take up the matter with their credit card company before applying for compensation from the TCF."We would recommend people always pay with a credit card that has the right for the consumer to reverse transactions if they do not get the service," Wells says.He says consumers can also take comfort in the knowledge that the TCF monitors the financial viability of its members, with all agencies reviewed at least once a year.IN SUMMARY* Book with a licensed travel agent.* Don't be afraid to check if a travel agent or wholesaler is licensed.* Pay by credit card if possible.* Where possible, book a holiday package rather than flights alone.* Check if your travel insurance policy covers insolvency.
© 2008 Sun Herald
