Travel sector asked to pay ‘unfair’ bonds, committee hears

Merchant service providers seeking bonds of up to 30% of projected turnover as safety net

Merchant service providers give travel agents and tour operators the ability to accept debit and credit card payments for goods and services. Photograph: iStock

Merchant service providers give travel agents and tour operators the ability to accept debit and credit card payments for goods and services. Photograph: iStock

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Travel agents are being asked to pay “utterly unfair” bond fees to merchant service providers (MSPs) that will render it “impossible” for many in the sector to recover after the pandemic, an Oireachtas committee heard.

MSPs, which give travel agents and tour operators the ability to accept debit and credit card payments for goods and services, are seeking bonds of up to 30 per cent of projected turnover from travel agents that will be used to cover returns to passengers in the event of cancellations or airline and travel failures.

Members of the joint committee on transport and communications described the amount sought by providers as “ludicrous” and “unfair”.

Travel agents and tour operators are required to put in place a bond with the Commission for Aviation Regulation (Car) calculated at 10 per cent of projected licensable turnover for tour operators and 4 per cent for travel agents, said Car commissioner Cathy Mannion.

“In the event of a tour operator or travel agent becoming insolvent, Car uses the bond to cover the cost of consumer claims. Where the bond is insufficient, Ireland has a Travellers’ Protection Fund in place to cover claims,” she said. This covers packages and flights.

Fianna Fáil TD Cathal Crowe said he was “alarmed” at the bond sought by MSPs after the sector had been “ravaged” during the pandemic.

“The travel sector is trying to make a recovery. But it’s going to be impossible when they’re being charged more than seven times what the Car is asking of them,” he said.

‘Vultures’

MSPs are “an asset to protect the consumer, but they’re also vultures to many in the sector”, he said. A bond of 30 per cent of turnover would be “crippling to businesses trying to function”.

MSPs are “being disingenuous and unfair to travel agents” and clarity is needed around the scheme, Senator Jerry Buttimer told the committee.

“It is important we give support to the travel industry . . . who are being asked for outrageous amounts of money,” he said.

Asked by Mr Buttimer whether MSPs are “being unreasonable”, Ms Mannion replied that she was unable to give a view as it is “not within the scope of Car’s work”. Asked if Car had engaged with MSPs on the issue, said replied that “when they approach us we meet with them. We are very clear with them on what our process is.”

There is a lacuna in the law that could put “an impossible burden” on travel operators and put them out of business, said committee chairman Fine Gael TD Kieran O’Donnell.

Members agreed it would be necessary to invite MSPs to speak to the committee on the subject in the near future and to write to the Department of Transport and Central Bank.

Shannon

Separately, the committee heard from the Shannon Chamber regarding support for regional air connectivity.

Chamber director Kevin Thompstone told the committee the closure of the Aer Lingus crew base at Shannon Airport had been a “devastating blow” to the airport, employees and region.

“It is an indicator of the devastating impact Covid-19 has had on the sector, nationally and globally,” he said.

The chamber is seeking a multiannual, fully funded, regional air-access recovery and growth action plan for the aviation sector. This includes funding in the order of €32 million annually, to ensure smaller State-owned airports can sustain operations and a doubling of Tourism Ireland’s marketing fund from €47 million to €94 million.

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