Last week, Ontario’s travel regulator published a proposal on its web site “for a modernized Funding Framework and Fee Model.”
As Open Jaw reported, it calls for three key changes to funding.
- Introduction of a “TICO Fee” similar to the current compensation fund fee.
- Adjustments to the renewal bands and fee levels to “provide greater equity.”
- Temporary Moratorium on current contributions to the Compensation Fund.
In the proposal, TICO said it would conduct an immediate consultation process in SEP and OCT, and the changes will take effect in APR 2022.
Open Jaw asked industry members for their reaction to the proposal. Their comments have been slightly edited for clarity and length.
“Tone Deaf and Completely Inappropriate”
Wendy Paradis, president, ACTA
“We are very disappointed with the timing of this consultation and have advised TICO of this. There is a federal election on and all our efforts right now are focused on securing much needed continued aid for agencies, travel agents and independent travel agents on the platforms of each political party.
Prior to COVID, ACTA conducted member surveys before consulting on something as important as this. We will be developing a plan of action in the coming days.
The changes ACTA has strongly advocated for is a move to “user pay” for funding the Compensation Fund, such as they have in Quebec. This would solve all of TICO’s financial needs and take the burden off travel agencies and tour operators. There is an even more compelling reason to do this now rather than significantly raise travel agency fees.
If the Ontario government believes that Ontario consumers need a travel compensation fund then the consumer that benefits from that fund should be making the contribution to the fund.
(Asked if these changes hit the mark) Absolutely not! The vast majority of travel agent businesses continue to be in a negative cash flow position – the financial situation for many is dire. These are inappropriate additional costs for struggling travel businesses who won’t see much revenue until well into 2022.
A fee hike for 2022 is frankly tone deaf and completely inappropriate.
Travel agent leaders, owners and ITAs are fighting to save their businesses, their livelihoods in the midst of a global pandemic. TICO and the Ontario travel industry need to persuade the government that collecting fees from these businesses in early 2022 would be a crushing blow for most.”
“A Matter that NEEDS our Attention”
Zeina Gedeon, CEO, Travel Professionals International
“(This proposal) is a start in the right direction. With the new fee proposition, it is taking into consideration the current state of the industry which will benefit more than 75% of the TICO registrants in 2021 and over 65% in 2022 in terms of the fee payment amount at least over the next 2 years.
However, it is yet to address the previous concerns about reforms that would reduce the financial stress on travel businesses, i.e., funding of TICO’s Compensation Fund to lessen the burden on travel agents and travel suppliers who have already been adversely affected with COVID-19.
Adopting a consumer-funded model with the options for pay into the fund should they choose to receive additional coverage should be assessed in the scope of fund compensation.
Most consumers who purchase travel through a credit card may receive a chargeback or have purchased insurance, which is what we experienced during the past 18 months. It is a clear indication that a reform is needed to the TICO compensation fund concept and scope.
Reformation of TICO’s compensation fund needs to happen and it needs to happen sooner than later to reduce the burden on travel agents and agencies.
(Despite the distraction of pushing for support of the industry during the federal election campaign) It is not a question of if we can give it the needed attention. It is a matter that NEEDS our attention.
During the past 18 months, every company has invested their resources in assessing their opportunities to future proof their business, and TICO should be doing the same – we need to be ready to restart travel and have all this settled.
We also need to make sure that the federal candidates also address the travel industry needs as an important topic.”
“A Joke” and “A Job Killer”
Richard Vanderlubbe, President Tripcentral.ca
“The proposal carefully is not putting undue extra burden on small registrants at this sensitive time. However, for larger registrants, this is increased burden, and I am not sure that the marginal cost of regulating a large registrant is 137 times versus a small one.
Certainly from a personal point of view, this proposal adds a significant new fixed cost to my business at a time where cash is still negative and no relief going forward for the compensation fund with the status quo caps and limits. That said, a recent decision to scrap the audit requirement saved my company significant money.
The larger issue is what to do with the compensation fund itself.
It is entirely evident that absent massive Government stimulus across the industry worldwide, there would have been a complete failure of the compensation fund to even address a single failure of a large registrant, never mind, airline. With this issue magnified and illustrated, no longer a “that’s really unlikely” scenario, you’d think the Ontario Government would take the time to properly reform the compensation fund going forward.
The pandemic has illustrated the enormity of the risk and size of a large failure, and it is completely beyond the scope of the Government to provide the façade of consumer protection on the backs of Ontario business. It can only be properly funded with a consumer pay model, and even that, no matter how well funded, would have required a Government bailout.
It is entirely time for the Ontario Government to get out of the business of insisting that Ontario travel businesses pay into a fund that is a joke by comparison to the risk. Now is the perfect time for the Government of Ontario to admit that it has no business requiring a compensation fund for a global risk.
It is far simpler to scrap the fund altogether, or, have it only cover registrant failures with consumer contributions, and in fact, cover registrants risk of non-arms length airlines and cruise lines. It is a job killer and ridiculous to impose the cost of this on Ontario travel businesses.
Right now the industry has been collaborating and lobbying the federal government probably more than the last twenty years combined. Perhaps the Ontario Government needs to feel the pressure from small businesses right across the province to finally deal with the compensation fund.”