The Gazette 1981

MARCH 1981

GAZETTE

Travelling Hopefully?

effective measures into operation for the protection of deposits. It is clear that a substantial bonding scheme is required and it is suggested that, in the nature of the parti- cular business, the individual bonding of tour operators for very substantial sums is to be preferred to collective bonding schemes. In addition, there is a strong case for a rapid development of a "compensation fund" which could be operated on a "trade-wide" basis, to cover the immediate effects of the collapse of any tour operator on individual travellers, whose particular holidays are immediately affected by the collapse. The Travel Reserve Fund Bill recently introduced in the Dáil by Deputy Patrick Hegarty is, apart from its obvious drafting defects, quite unsatisfactory. To confine, as it does, the protection of the fund to customers of the Irish Travel Agents' Association members alone suggests that the aim of the legislation is as much the advance- ment of the Association as the protection of the public. The Bill, as introduced, confers a status on this Associa- tion which ought not to be conferred on any group which is not the subject of statutory control or regulation. It is suggested that such a "compensation fund" might be also used to compensate travellers who suffer unhappy experiences on their package tour holidays. This second aspect of protection for the travelling public has not as yet been tackled comprehensively in the Republic of Ireland. We have no equivalent of the Codes of Conduct for tour operators and retail agents operated by the Association of British Travel Agents and the arbitration arrangements imposed in the Republic of Ireland on individual travellers by the standard booking form of the I.T.A.A. is unsatisfactory in many respects. Apart from the fact that the arbitration cannot be conducted within the context of a code of conduct, no arrangements were made by the I.T.A.A. for the funding of the arbitration scheme. The A.B.T.A. scheme provides for "a simple and inexpensive method of arbitration whereby the claim may be considered on documents alone". If the customer loses on arbitration, he can only be required to pay twice the deposit which, in the normal case, would be unlikely to exceed £40. The I.T.A.A. have unilaterally provided that an arbitrator is to be appointed by the President of the Incorporated Law Society (without having consulted the Law Society as to whether the President wished to be involved in such an arrangement!) and has made no provi- sion for any contribution, either by the Association or by the tour operator concerned, towards the costs of the arbitration. The arbitration can, therefore, be quite expen- sive for a customer who is at risk of having the costs of the arbitration awarded against him. The only redeeming factor is that because the arbitration is not limited to documents, the tour operator may be in difficulty in producing witnesses from the hotels or transport authori- ties concerned to refute the claims of the customer. It is understood that the Director of Consumer Affairs hopes to persuade the Irish Travel Agents' Association to establish a code of conduct along lines similar to the A.B.T.A. scheme in the near future. It is to be hoped that the establishment of such a code of conduct will include an arrangement whereby the costs of arbitration are substantially funded by the I.T.A.A., so that the customer is only at risk of suffering a relatively modest loss, in the event of the arbitration going against him.

It may, as Robert Louis Stevenson once suggested, be better to travel hopefully than to arrive, but is it better to pay hopefully than to travel? The collapse of Bray Travel Ltd., a leading tour operator, following rapid departures from the scene of other lesser fry, must throw this question into stark relief and has already led to increasing demands for better protection for the public against the loss of deposits or other sums paid for holidays, which vanish with the demise of the tour operator. The collapse of any major trading company highlights certain general flaws in our control of trading companies. Apart from the basic weakness that major trading companies are permitted to operate with minimal nominal capital, there is no requirement that any particular amount of paid-up capital should be maintained while a company is trading, nor is there any obligation on a parent company to accept liability for a subsidiary s debts. With this background, the likelihood increases that members of the public will suffer as a result of a failure of a trading company, when that trading company is found to be operating in an area of activity where profit margins are by any normal standards extraordinarily small. It has been authoritatively reported that the profit margins hoped for by tour operators frequently do not exceed 10% and it is clear that the tour operators' business, like modern-day insurance, has become largely a "money business. Profit comes not only from the activity being carried on, but from the investment income earned from the monies paid by customers, in advance of their holidays. . The tour operator is obliged to make commitments tor hotels and for seats on charter airlines anything from six months to a year in advance of the holiday period, which calls for considerable expertise in anticipating likely demand. Any unexpected drop in demand may have a serious affect on the viability of the tour operator. In such circumstances, the need for protection of the monies paid in advance to the tour operator by the holiday maker is obvious and it is strange that neither the Trade Association nor legislation has, long ago, brought

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