Who Foots The Bill When Travel Companies Fail
by Bruce Bishins, ARTA Canada

Canada’s Association of Retail Travel Agents (ARTA Canada) wants to make the point as to who really foots the bill when Ontario’s travel “watchdog”, the Travel Industry Council of Ontario (TICO), comes to the aid of consumers who purchased travel from a failed Ontario travel provider, a registrant-sold failed airline end-supplier, or from a sound travel retailer which booked through one.

During the past twelve months alone, TICO registrants paid more than $2.8 million dollars out of their own pockets to back-stop these failed companies, draining the industry-financed compensation fund by roughly 10%. While the direct hit to the fund is bad enough, there is collateral damage which the industry doesn’t see as clearly:

– Credit card companies which have paid out millions of dollars to directly reimburse travel consumers – continuing the credit squeeze on retail travel

– Consumers with trips destroyed and vacation dreams shattered

– Travellers in destination forced to pay again, scramble for alternative arrangements, and live a nightmare beyond comprehension

– Travel retailers which suffer a “black eye” as consumers don’t make a distinction between retailers and wholesalers

Make no mistake. TICO will soon be at the doorstep of Ontario registrants forcing them to pony-up more for the compensation fund and registration fees. Where are the checks and balances that TICO is actually preventing or inhibiting failures in the first place? TICO isn’t a watchdog, it’s a St. Bernard rescuing the already injured.

More than a year ago, TICO promised registrants a third-party review of its handling of the more than $1 million drain on the compensation fund due to the 2006 failure of One Step Travel; a failure which the Ontario Court of Justice pointed fingers at TICO for its unsatisfactory supervision and control over a travel company with 10 years of financial irregularities and 7 years of insufficient working capital. To date, there has been no third-party review completed as promised by TICO. ARTA Canada asked TICO for an update on the review, however, TICO declined to respond.

TICO does a fine job in cleaning-up the mess left by failed travel companies and assisting consumers after-the-fact. However, this is like closing the barn door after the horses have bolted. More importantly, the clean-up is paid by all Ontario registrants. There doesn’t seem to be any incentive for TICO or oversight of TICO’s controls to better scrutinize financially weak travel companies. As long as registrants are willing to keep making bandages available, TICO is prepared to rely upon them.

At the same time, TICO is now five months without a ministerial appointment to its board, calling into question TICO’s and the Ministry’s honesty with registrants as to the urgency to have amended the TICO Bylaws at the September 2009 AGM where TICO removed a registrant-elected board seat to accommodate the imminent appointment of fifth ministerial board member.

I’m certain that the ACTA members whose numerous proxies solicited by ACTA Ontario swept this change into effect would have thought twice before agreeing to remove an elected board seat. It’s shameful that TICO’s ACTA-heavy board predominates at the expense of eliminating the democratic voice of registrants themselves.

ARTA Canada will continue sharing its concerns with Ontario legislators and to bring about much-needed change at TICO and relief to registrants. ARTA Canada will also continue its efforts to establish a national travel consumer protection regime, financed by consumers who wish to avail themselves of such protection.

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