Ontario travel agents registered with the Travel Industry Council of Ontario (TICO) have been granted a one-year period during which they can issue clients vouchers for previously purchased travel that has been upended by the COVID-19 pandemic.
And while there may be some consumers unhappy with the change, TICO President & CEO Richard Smart said that the alternative could leave the travelling public in a much worse spot.
Last week, the Ontario government responded to the COVID-19 crisis with a series of amendments to the regulation of the province’s Travel Industry Act to ease the burden on TICO registrants, including some fast-tracked changes which Smart said were due to be announced in the near future, part of a years-long review of the Act and its supporting regulation. While he declined to provide details, Smart said that additional relief measures are also being discussed with the province.
The amendments include:
- Eliminating review engagement reports for small registrants with annual sales less than $2 million and requiring a verification statement instead.
- Eliminating audit reports for large registrants with annual sales of $10 million or more and requiring a review engagement report instead.
- Removing prescriptive working capital thresholds for all registrants and requiring them to maintain positive working capital instead.
- Clarifying under section 46 in the regulation what a registrant, who has acquired rights to travel services for resale, must provide to a customer when a supplier fails to provide the travel services paid for by the customer, which includes a refund or comparable alternate travel services acceptable to the customer; or voucher or similar document for future redemption towards travel services.
- Providing a time-limited exemption under section 46, which would allow registrants to elect to only provide a voucher or similar document for future redemption towards travel services where a supplier fails to provide the travel services after these changes come into effect and that failure is related to the COVID-19 outbreak. If the exemption is applicable, the voucher or similar document issued must meet specified requirements.
- Expanding the coverage under the Travel Industry Compensation Fund for consumer claims involving vouchers or similar documents that may be eligible for reimbursement. This will help ensure that any voucher or similar document that a customer redeems for travel services (e.g., flight, cruise or hotel) but for which travel services are not provided may be eligible for a reimbursement claim.
- Temporarily expanding coverage under the Travel Industry Compensation Fund so that consumers with unredeemed vouchers or similar documents issued by a registrant that cannot be redeemed due to the failure of a registrant associated with COVID-19 may be eligible for a claim for reimbursement.
With the majority of registrant inquiries concerning the matter of vouchers, Smart clarified a few points about the measure to PAX.
Between March 30, 2020 and April 1, 2021, TICO-registered travel agencies and tour operators selling bundled travel services (such as a vacation package; non-bundled services will be subject to the refund terms and conditions of the end supplier at the time of purchase) will be able to issue vouchers as an alternative to a full refund, in the event a supplier cannot provide travel services due to COVID-19. Further to that, Smart explained that the vouchers will be valid for travel departing up to a full year from the date of issuance, hopefully giving travellers enough time to redeem them.
“We recognize the hell that advisors have been going through with irate clients asking for money back; they can now say they have the backing of TICO,” Smart said. “They can say that because of COVID-19 the voucher is a form of compensation.”
Acknowledging that not every consumer will be happy with the measure, Smart said that travel advisors can remind their clients that a voucher buys additional peace of mind at an uncertain time for some travel suppliers. He explained that consumers who have been issued a voucher and are faced with a sudden supplier collapse will be able to make a claim against TICO’s Compensation Fund.
“A lot of consumers are upset that we’ve said voucher is acceptable. In my discussion with consumers, I’ve acknowledged this is an extraordinary situation and we’re trying to ensure that the industry survives.
“We’ve been trying to find a balance between consumer protection and registrants – and registrants can’t always give refund because money has gone to end supplier…. It’s a huge clarity and comfort to the registrants – I’ve heard that this was a big positive change and while some customers may be unhappy, our position is that it’s better than if every travel business just failed at once.”
Comp Fund impact
Smart said that while the Compensation Fund currently sits at $25 million, with a $5,000-per-passenger claim cap, that amount is a “drop in the bucket” should multiple major failures come to pass.
While some of the burden will be alleviated through travel insurance, Smart said that it’s too early to tell what that amount will be, acknowledging that since COVID-19 became a ‘known issue,’ a number of insurance providers have declined to reimburse travellers for cancelled trips.
And while a modernization of the funding model – such as the possibility of introducing consumer pay – remains on TICO’s radar, it remains “a distant second priority” at the current time, Smart said.
“Now is not the time to ask for the consumer to pay into the Fund just yet,” he said. “We know the funding model needs to change and we’re looking at all options in the future, but right now we’re taking the high road and emphasizing customer service.”
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