Abta News

[Stephen]

Holidaymakers suffer as ABTA guarantee goes


Holidaymakers who use High Street travel agents to organise individual packages are facing a sharply increased risk of losing money when firms go bust after a change of rules by the Association of British Travel Agents (ABTA).

After some expensive claims for high profile failures, including Cruise Control and Travelcare, ABTA has announced it will 'cease direct payments to consumers in respect of failure of member agents conducting retail activities when nothing has been booked by travel agents.'

It is also warning travellers that ABTA members selling non-package holidays, like accommodation-only deals, are no longer obliged to offer financial protection to consumers providing this is made clear in advance.

ABTA spokesman Sean Tipton says: 'Many travel websites offer no financial protection at all to customers, but our members must now remind customers if this is the case.'

After losing 1,000 members since 1999, ABTA retains around 6,500 members on its books. It defends its latest move as a response to the growing trend for online bookings, and claims no other retail sector offers protection on sales with such a long gap between purchase and delivery.

ABTA claims the new rules needn't leave consumers more exposed to risk - providing they are careful when they book.

Says Sean Tipton at ABTA: 'We emphasise travellers must obtain a confirmation invoice from suppliers of holidays or any travel arrangement if they wish to be fully protected.

'If they don't get this documentation within a week of booking at most, they should contact ABTA at once.'

Tipton denies that any of the 20 million people who book packages each year or efficiently-run travel agencies have anything to fear from the change.

'The main purpose of the change is to ensure the public gets what it has paid for and stop a small minority of cowboys in the industry taking money off customers without booking what they promise to book,' says Tipton.

ABTA, which paid out £4 million in 2005 to holidaymakers after 20 companies failed, strongly denies it faces a cash crisis.

'We have well over £20 million in terms of money we might need to settle claims,' says Tipton.

'We are nowhere near insolvency, but we need to stop offending agents taking money and not making bookings'.

However, tour industry figures claim the change is highly significant - even though few members of the public are likely to notice it.

Says Noel Josephides, whose Sunvil Holidays belongs to the rival Association of Independent Tour Operators (AITO): 'It is a nightmare for everybody, but probably inevitable in the face of the rising number of internet and no frills airline bookings which usually offer no guarantees whatever on people's money.'

'ABTA believes its move will leave its members better able to compete, but it really means the public has less security. The ABTA symbol is being eroded, and in many cases, you won't be able to guarantee people's money or that anybody is taking total responsibility.'

[Stephen]

What's the future for ABTA after its USP is axed?

ABTA’s decision to withdraw its consumer guarantee has left many people asking the question: What is the point of the association?

Throughout my years in the trade, I have always been told that the ABTA logo has huge recognition among the public – in a MORI poll conducted in 2004, some 83% of people had heard of it.

The poll didn’t ask people what they thought it stood for, but it has become synonymous with safety and protection for consumers. People have always assumed that if they bought something from an ABTA travel agent they would get their money back in the event of a failure (although, of course, if they bought a flight and the airline crashed they wouldn’t be protected).

Now the association has come out boldly and said it will no longer offer that guarantee of protection. It can’t afford to, because it has had to pay out millions to holidaymakers who have been the victims of fraudulent agents.

Of course, the biggest fraudster was its own former legal chief Riccardo Nardi(i went to school with him), who pledged to clean up the industry, hatched a clever plan to rip-off ABTA himself to the tune of £1 million over eight years and then wrote a cringe worthy open letter from prison pleading for people to understand the real Riccardo. Oh, we do, Riccardo, we do.

You can understand why ABTA has taken this stance, after being stung badly by a host of crooks.

But, unfortunately, ABTA has killed off its one and only unique selling point. This week, I’ve spoken to lots of companies, both big and small, and many of them are asking what the association has left to offer.

An ABTA spokeswoman told me it still had a big role to play. She pointed out that the Office of Fair Trading had just given its backing to ABTA’s Code of Conduct and that people could book with confidence through its companies.

But how can they when some members could be crooks and if a holidaymaker is unlucky enough to book with a bad apple, it’ll be a case of ‘tough luck’?

ABTA is also relaxing the rules on membership, to allow in all number of internet companies which never make a profit and are never likely to do so. Of course, in 2006, the association needs to have a broader membership than just the traditional companies.

But, with these changes, ABTA has simultaneously opened the door to fly-by-night companies while withdrawing its guarantee to consumers. What do you think the net result will be? Answers on a postcard, please, or rather on this website.

ABTA says that although payouts to cover fraud have been high, the majority of people have nothing to worry about because the numbers affected have been tiny. Well, you can bet your life they’ll increase.

The other thing that will happen is that national newspapers will start to write hard luck stories about people like, for example, Mrs Miggins from Bradford, who lost £2,000 when she booked through an ABTA agent.

They’ll have quotes like this: “I thought my money would be safe when I booked through ABTA, but they refused to help. It’s disgusting and I just want to warn other people not to book with an ABTA company, because you’ll lose all your money if something goes wrong.”

These incidents will be few and far between but, with national coverage, the perception will be that ABTA is worthless. And you know what happens with perception – it soon becomes reality, at least in the minds of holidaymakers.

And where does this leave the poor high street agent? Already struggling to cope with falling commissions and direct bookings, it will now have a logo in the window that counts for nothing. Just for good measure, they may well have to try to explain the complexities of consumer protection to baffled holidaymakers.

Perhaps the £1 levy, which could yet be revived, may ride to ABTA’s rescue. But what if it doesn’t?

There has been a feeling for some time that ABTA is living on borrowed time unless it can modernise and I admire people who are bold enough to make progressive changes.

But I’m not alone in thinking that ABTA has, with these changes, scored a spectacular own goal from which it may struggle to recover

[Stephen]

NOT ABTA BUT CAA AND CAN HAVE A HUGE EFFECT


01 March, 2006

CAA warn against DIY packages



The Civil Aviation Authority will use a consumer show this weekend to warn holidaymakers they risk wrecking their holiday and losing thousands of pounds by booking DIY packages.

People attending Destinations in Birmingham will be told they have no financial protection if they self book a trip and could be stranded overseas if an airline goes bust or lose their entire holiday.

ATOL promotion manager David Clover said: "We believe customers should be aware of the potential risks so they can make an informed choice."

The CAA said it repatriated or refunded more than 32,000 holidaymakers in the year to March 2005 and paid out almost £10.5 million to people on ATOL bonded holidays.