Simon Bernardi is Managing Partner of Australia and Beyond Holidays.
This is one of scores of letters received in response to the discussion paper earlier this week in Travel Daily (TD 15 Jul).
Got an opinion to share? Let us know in up to 400 words via email to feedback@traveldaily.com.au.
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WHAT a great open letter and thought-starter for the industry.
There are some excellent points raised, especially in relation to provisions for the Agent of Last Resort. However I continue to be optimistic and do not share the view expressed on the overall outlook for the Industry. We are in unprecedented times that none of us saw coming. Through no fault of any agent, our industry is at a crossroad. Now may or may not be a good time to close your business, but there certainly are agents who, have their overheads under control, don’t have debt, have operated proper client accounts and a great customer base ready to travel as soon as they are allowed. This group would be very ill-advised to close now.
The borders
Whilst international and domestic border closures currently do make the industry unviable, this will be a situation that will pass and our industry will thrive again. People won’t stop travelling, in fact they are queuing up now. Once either a vaccine is developed or a “new normal” plan is developed we will see a strong rebound of the travel and tourism industry. We would be getting some of this volume now if domestic borders were fully opened (as they should be with the exception Victoria for the short term).
Australia is already considering travel bubbles with a number of regional neighbouring countries and this needs to be encouraged and could happen sooner than later with the right protocols in place. As an industry we need to look how this is accelerated sensibly and safely. The biggest challenge to make international travel bubbles happen is to open our domestic Australian borders first.
Australian border openings need to be co-ordinated nationally and consistently. COVID-19 does not recognise state borders and closures should be limited to hotspots only, as recommended by the Commonwealth Chief Health Officer. Unfortunately inconsistent policies by different state governments have created uncertainty for travellers and unnecessarily impact businesses. Examples include whole states locked off and restricted when the COVID impacted location, a small and contained area, may be thousands of km away from areas locked down.
Consider your options
If a travel business cannot survive with little income and government support until say February next year, then the owners do need to consider their options by developing a financial business plan outlining the maximum time they can survive, to allow a decision to be made on either stay or go options.
Unfortunately it is only the numbers that will dictate this.
The industry and AFTA needs to support members in transitioning to close down including:
• Transitional support in terms of outstanding refunds, travel credits, and ongoing bookings (maybe Agent of Last Resort)
• Financial support in ensuring accounts are up to date and possible options examined from a survival perspective
• Development of a guideline structure of dealing with these issues including orderly exit with professional legal input. This will cover termination of lease and extinguishing of other obligations as required
• AFTA itself is under financial pressure and if it decided on the Agent of Last Resort, it would need to be funded by government or industry if there were significant set up costs.
AFTA and ATAS are vital
It has never been more important than now for AFTA to maintain their annual financial checks for qualification of membership. This reporting and requalification for businesses provides the best snapshot of where the industry is currently in terms of viability and outstanding commitments amongst AFTA agents. AFTA through ATAS gives the industry credibility. If tens or hundreds of ATAS agents failed during the pandemic then all credibility will be lost and there would be a long-term impact on the industry. AFTA are the custodians of this reputation and this is why annual audits are important.
The federal government has indicated that there will be support for industries such as ours past the September deadline. AFTA, ATEC , TTF and others have all worked hard with government on making this happen but it may not be in the current form.
Has Armageddon occurred? Armageddon hasn’t occurred yet but it might. We will see a major loss of businesses and great people but we will survive and thrive as an industry.
We need to create our new operating environment aggressively and at every chance we get in a coordinated way. This should be jointly if possible with all the major travel and tourism Industry bodies as a strong single lobby group (a bit like the national cabinet).
The future is bright
• If travel agents didn’t exist would someone create them? YES
• Will travel rebound quickly? YES
• Will there be as many agents as now? NO
• Will there be greater rewards for those who remain? YES
On the other side of this, there will be a “boom” in our industry and the changes we have all spoken about needing to happen for the last twenty years will be accelerated including:
• Adding sustainable fees to everything we do; the business needs to be sustainable over and above “clipping the ticket”
• Growth in home based agents, with little or no overheads
• Agents with exceptional client relationships and developing their own marketing strategy using new technologies
• Growth of travel agent alliances with other like- minded agents
• No credit
An “Agent of Last Resort” is a good idea for those with unfinished business who wish to exit the industry in an orderly way. I would see AFTA as the guarantor and manager of the transactions. The business itself should be outsourced to existing agents staying in the business and they would be remunerated by AFTA, rather than being employed by AFTA.
It’s horrible now but it won’t be for ever.