ACTA President David McCaig says his association is ‘winning a few battles’ on the issue of fare disclosure, but he’s increasingly concerned about a potential credit crunch for retailers and wholesalers in the wake of another travel industry failure.
McCaig says he thinks it’s no coincidence that Go Travel South based itself in the unregulated province of Nova Scotia and sold out of also-unregulated Manitoba. ‘It’s ridiculous. Companies like this are allowed to set up, prove they have adequate capital for start-up, and then…nothing. There’s no oversight at all,’ says McCaig.
With credit card companies forced to foot the bill for the vast majority of Go Travel South customers, McCaig worries about repercussions for an industry already perceived as high-risk by the card merchants.
‘There are not a lot of happy people at the credit card companies and it’s a genuine concern for the whole retail/wholesale distribution system,’ says McCaig. ‘Tour operators are being forced to increase security deposits by astronomical amounts and retailers are being hurt too. There’s still a credit crunch coming worldwide, requirements are going to get stiffer and some owners won’t be able to meet those requirements.’
Meanwhile, McCaig says ACTA will continue to push tour operators to restrict add-on fees to actual taxes mandated by government. Currently, he says, some tour operators are padding extra fees with ‘amounts either billed to suppliers for various services they use or invented by the supplier to get more money from the consumer.’
McCaig says he believes the current pricing model alienates consumers, who see a low-ball advertised price and then find out the actual price is hundreds of dollars higher. He says the model hurts agents too, by denying them commission on elements that should be included in the base price. ‘When a price says ‘plus taxes,’ those extras should be taxes, not a fuel surcharge or a usage fee.’
The ACTA President says travel these days ‘is a pennies business’ for both wholesalers and retailers, and says the industry fixation on the lowest price needs to change. ‘Consumers should get the all-in price first, then agents can sell based on the attributes of the product and the needs of the client. We believe this will actually help wholesalers, because right now they are giving away product with no margin and everything sold on price.’
Quebec-based Greek-specialist tour operator Hi Tours is the latest company to heed ACTA’s call for all-in pricing, says McCaig. He believes there will be others: ‘I’m getting a strong sense that companies are responding positively to our arguments.’ He cites WestJet Vacations as an example of a company that doesn’t pad the ‘taxes, fees and surcharges’ column, yet still prospers. He also singles out escorted tour companies like the Travel Corporation of Canada, which offers agents commission on the full package price.
Tour operators in Quebec are forced by regulation to advertise an all-in price, but McCaig says he hopes it doesn’t have to come to that for the rest of the country. ‘We hope the industry will straighten itself out and get into a fair pricing, fair compensation model. We’re making headway.’
Agents will have to play their part in a pricing model shift, says McCaig, both by moving away from a price fixation and delivering strong support to preferred wholesalers.
‘If you’re just selling stuff cheap I think you’re making a big mistake. The discounting model isn’t good for anyone. But also, if agencies sign a preferred agreement, they need to live up to that and pay attention to that commitment.’
McCaig says ACTA continues to talk to GDS suppliers and booking engine providers like SoftVoyage, with the goal of ensuring that the technology is ready to display all-in pricing first. The current practice of base fare display does not reflect the final price or give consumers a fair pricing comparison, because the difference in add-ons between companies can be as much as a couple of hundred dollars per person.