“Anonymous,” the concerned Travel Daily reader who raised the issue of an Agent of Last Resort some months ago, believes now is the time for action.
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In early Jul I proposed the establishment of the Agent of Last Resort as part of a suggested plan in dealing with the issues facing the local retail travel industry (TD 15 Jul). At that time a number of Travel Daily readers responded that things were just not that bad.
It is time to recognise that for the most part the Australian retail travel industry is closed until the international borders reopen. Shortly after my original discussion paper the Federal Government extended Job Keeper to the end of Mar 2021, while at the end of Sep the National Code of Conduct for commercial tenancies was extended to the end of December. (Note: the NSW state government has just extended the Code to the end of Mar 2021 – TD 17 Nov).
This has created a liability for business of owing landlords 12 months of capitalised, discounted rent – not an insignificant sum or liability to have on the books. Under the stewardship of Darren Rudd, AFTA has roused the industry to lobby the Federal government to make a one-off grant of $125 million in the recent budget, which was not granted.
AFTA has now, without providing any details, apparently upped the request to $250 million, but at this time the grant is still a work in progress. I have spoken to many across the industry. All are happy to receive the grant, but unfortunately the amounts proposed will not be a complete solution.
After almost ten months of no income and still dealing with refunds and credits, agents are currently flying on fumes.
What financial resources does a business need to survive another 3, 6, 9 or 12 months?
The recent news of now two possible vaccines is very good for morale. However the bad news is there is no firm timeline for distribution of such vaccines (and of course we all fervently hope that they do pass the trials). Consequently there is no plan for the reopening of the international borders. So for businesses to plan for survival, where to from here?
I am calling on AFTA to start putting into place the Agent of Last Resort or an equivalent based on my previous discussion paper. Let’s face facts; the annual summer shut down of business in Australia is only just over a month from now. Nothing happens in Australia from mid-Dec until late Jan. And as we are all well aware, JobKeeper is scheduled to terminate at the end of Mar.
By mid-Mar the entire industry could be on a two week notice period. In my opinion, those businesses that can survive in some form will only be those that have access to other sources of income or capital.
The end of Mar 2021 represents 13 months since any travel business has had a normal trading month and that is before accounting for refunds.
In general, most agents are still waiting on some refunds; we all have clients with credits. And whether the businesses that provided the credits will still be around by the time the international borders reopen, is another very big question.
If some mechanism is not put in place soon for those that must walk away, liabilities post shut down are a real threat, with agents who cease trading likely to be pursued by unhappy clients. This new Agent of Last Resort institution (whatever it is called) must be funded and staffed so all who hand over the remains of their businesses can rely on the integrity of said body.
If the Agent of Last Resort does not exist, who will trust those businesses that do survive in the post COVID-19 world and any new agents that rise in the future? COVID-19 is not the fault of the global travel industry, but unfortunately without a mechanism for management and recovery of legacy bookings, the current situation and the demise of the sector, without a mechanism for management and recovery of legacy matters, will damn those that wish to transact in the post COVID-19 world.