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Originally Published on Travelmole link

Travel Counsellors’ founder and outspoken industry commentator David Speakman gives his thoughts on (the lack of) government support, the problem with RCNs, airline refunds, the future of ABTA – and why airport Covid testing might not work.

Six months since lockdown and the travel industry is on its knees. It can recover, but there is a lot more pain to come and people need to face some harsh realities and take some decisive steps:

Don’t wait for government help
The industry has to resign itself to having no specific industry support from the government. It should cease acting as a victim as it’s a distraction and, frankly, embarrassing.

Telling the public a handout is needed or ‘it’s toast’ will not encourage customers to book. More importantly it shows weakness when assertiveness is needed.

Instead, access the support that is available, such as the Coronavirus Business Interruption Loans. The deadline to apply for these has just been extended until 30 November.

Call out the airlines
The government might help airlines but in exchange for aid it must insist on better financial governance and force airlines to pay refunds in line with EU261.

Airlines are to blame for the refund logjam for which the industry is being criticised by the consumer – travel agents haven’t been able to refund customers for cancellations because they haven’t been able to get the money back from the airlines.

Travel industry stakeholders should have called out the airlines earlier and persuaded the government either to force airlines to refund or pay the refunds itself.

Refund Credit Notes (RCNs) aren’t the solution, instead they’ve allowed the issue to go unresolved and left companies on the brink of bankruptcy.

Consign RCNs to the past
Consumers should not be providing credit to the travel industry, for this reason RCNs were a mistake.

The industry must come together to ensure that customer money is protected until their holidays have been delivered. It’s fundamental and non-negotiable.

It’s been mooted that RCNs could be a permanent feature of travel refunds, I also understand that the virus can affect the mental capacity of many to think straight.

Ring-fence customers’ money
Trust funds will safeguard the ATOL-holder and consequently the consumer if the supplier goes bust, but of course they’re not a panacea, they don’t help if the supplier refuses to adhere to their legal obligations.

Rebuild trust
When the industry jumped on the RCN band wagon it was as though everyone had slept through the costly presentations on Customer Service, Customer Experience and CX seminars.

The industry decided to man the lifeboats with captain and officers, leaving the crew and passengers to fend for themselves. The basis of trust in any relationship is being selfless, yet many in the industry put themselves before the customer.

It must now be the aim of the CAA to insist on trust accounts for all ATOL holders. It can’t happen overnight as it’s impossible for most companies to instantly comply, but the CAA will make it more difficult to obtain an ATOL for those companies without trust funds, forcing applicants to realise that these are the way forward.

Airports must set their stall out to attract customers. Queues at check- in should be minimal and security lines should be reduced so paying to queue jump becomes unnecessary. More staff should be hired to avoid long queues, which will otherwise become inevitable due to social distancing. Let’s make the customer experience better.

Question quarantine with scientific fact
The industry should fight for its survival by challenging the science that has so weakened it. The government is now talking of introducing ‘vaccination certificates’ that would insist on people proving they’d been vaccinated before they fly. It would be a tragedy for the country and the industry if airlines, in exchange for financial support, acquiesced to the implementation of such a thing. As yet there is no known safe vaccination for Covid, these things take at least five years to develop and it would be against people’s civil liberty to force them to be vaccinated, especially with a vaccine that’s been rushed into production. Far from encouraging travel, it would limit it in the long run.

Don’t pin all hopes on airport testing
Covid-testing at airports has been suggested as a way to eliminate or reduce quarantine and reinvigorate travel, but can airports be trusted to implement testing in an efficient way? Their track record on managing check-in and security queues is abysmal.

London Heathrow has claimed it is ready to test 13,000 arriving passengers a day, but there are twice that many arriving per day at the moment, and it’s only operating at 25% of its normal capacity.

If tests can’t be carried out swiftly, it will quickly reach the tipping point where it’s just more hassle to travel than it is worth.

Find one influential voice
Tour operators and agents should seek to have a voice. ABTA would be the natural vehicle, there are good people there, but it must be reconstituted and re-organised so that it represents every member rather than only its biggest benefactors. It could be the catalyst for all trusts, yet its reluctance [to take on this role] underlines its position.

First let me declare an interest

I have previously criticised Abta for no longer financially protecting customers. At Abta Convention in Marbella in 2006 I explained that Abta was moving to a structure that would disenfranchise travel agents.

Travel Counsellors left ABTA in 2004 and set up its own trust to financially protect customers.

An explanation of some of the issues

See also https://www.travelweekly.co.uk/articles/42948/comment-criticism-of-abta-highlights-wider-issues

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The industry is in a financial logjam as airlines (and to a lesser extent, hotels,) refuse to pay refunds for flights that have been cancelled due to the pandemic. These flights are the flight component of a “package” or a flight-only booked by customer or agent or operator. This has resulted in tour operators and travel agents refusing or not being able to refund the customer  because the refund usually from the airline or maybe the hotel has not been passed back to those who sold the product.

See my  video interview which explains in more detail.

Abta as the UK primary travel association voice stepped forward to navigate its members through this problem.  But ABTA’s role should be put into context.

In 1984 I was elected to ABTA’s Travel Agents Council (TAC), which held half the votes of the Association and had a 50% representation on the main ABTA board. The TAC was the heartbeat of ABTA as it’s travel agent members interfaced directly with customers and at that time a tour operator didn’t dare to sell other than through an Abta agent or “go direct”. Over the years Tour Operator Council (TOC)  members set up their own travel shops and eventually their extra votes across both categories of TAC and TOC enabled tour operators to dominate Abta.

At my first TAC meeting I suggested ABTA should develop a payment scheme for the holiday industry, akin to BSP (Billing and Settlement Plan for IATA payments). It eventually should sit as the core function and strength of ABTA. It would control the financial relationship between agent and principal and between big and small and help to protect customer money.  After leaving the industry in1987 I returned to the TAC board in 1994. By then ABTA had implemented SPS (Single Payment Scheme) but had decided to make it a non-mandatory operator collection scheme. It was better than nothing, just.

In October 2006 customer financial protection was withdrawn by Abta but its impact on customers was, for obvious reasons, not highlighted. Most agent members, apart from those who followed the politics, didn’t realise the customer financial protection had all but disappeared. Bonding remained to protect operators pipeline monies if the agent went bust.

In July 2008 The Federation of Tour Operators amalgamated with Abta and the Association had come full circle, from being a travel agents association served by operators, it had become a tour operators association served by  travel agents. Representation on the ABTA  board became less democratic leading to some members having a disproportionate amount of influence.

The industry last year was was hit by a typhoon, when Thomas Cook went bust. ABTA’s reaction was to defend the demise of its second largest member by blaming its bankers for charging too much interest on its  massive debts. It’s accounts told a story of a delusional company not addressing its precarious financial position. Perhaps a more rigorous Abta regime may have prevented many of Cooks fellow Abta tour operator members, selling through Cooks, being virtually wiped out by Cooks’ not passing on balances. Abta bonding would normally protect these operators if they did not receive balances. But money was only protected if tour operators did not give credit terms to the agent, most did yet these operators still legally had to provide the holiday.

At the beginning of 2020 the “elephant in the departure lounge” was how many operators had suffered financially at the hands of Cooks. Perhaps ABTA  could have done more to police Cooks and protect fellow members?

Abta is still resolute in avoiding clarity of its financial promise, words such as “Protection” “Support” “Confidence” is still common currency on its website and its Code of Conduct is now promoted as the reason the public should book with an Abta member. It insists the strict policing of that Code will secure the standards of business behaviour of its members, financially, contractually and  ethically.

Airline finance is at the core of the present problem as airlines have been virtually unanimous in refusing to pay refunds. Initially a cancellation issue transformed into a cash crunch as airlines stopped flying.

See my article “Don’t spend money you don’t have”

These refunds have affected not only flight-only but flights that formed part of a package, sold by an Atol holder. Atol holders that haven’t received cancellation refunds from airlines haven’t got the money to comply with Package Travel Regulations that oblige them to refund the customer within fourteen days.

ABTA’s support of Thomas Cook reflected just of how far it had moved from being an Association that valued all its members. It’s previous structure reflected the travel industry as a broad church. Agents had the customers interest at heart and kept an eye on the excesses of operators and in turn operators both big and small provided the risk, scale and product for all.

Present day Abta is a totally different animal. It’s board is made up of its CEO and two political/public sector members! Native UK companies are represented by two operators whose full accounts  are unpublished as they come within the definition of “small companies” and an agency with commissions of less than £7m. This gives an approximate transaction value for native UK board members of less than £100m.

The remaining five members on the Abta board represent companies with their financial decision-making outside the UK, two in Germany and one each in Australia, the US and Dubai. Collectively they have UK sales of just under £9Bn and worldwide sales of approximately £35Bn. Travel agents are now represented by an Australian chain of agencies plus Midcounties Co-op. In effect This makes Abta unrepresentative of the vast majority of its members and therefore unaccountable.

ABTA was in a pandemic predicament. Should it campaign against those airlines who refused to refund? It could have organised its members and along with a public outcry put pressure on the Government to pressure the airlines. Threat of expulsion from ABTA would force members to toe the line and would have shown solidity with the public, refunds might not have been available immediately but it would have highlighted the real culprits and put the industry on the right side of the issue.

But that strategy was at odds with the needs of the majority of global players on the ABTA board. By far it’s biggest member TUI has its own airline and its own hotels and has little excuse that others are withholding money. Initially it refunded but later changed its policy as the scale of the problem unfolded.

Other global players had bigger problems outside the UK and some operators who had already suffered at the hands of Cooks were financially wounded.

So Abta came up with a solution, to offer refund vouchers that would promise a refund in the future, this served to blow the whistle on the fact that the whole industry was short of cash and it denied customers their legal and contractual rights to a refund. But it  also set an example that any operator could refuse to refund and not be reprimanded by Abta. Fortunately for Abta members the legal system was also on lockdown and it saved the industry from being swept away by a public tsunami of claims. A tsunami that reflects the pent up anger of frustrated customers and the fundamental misguided decision of Abta.

These vouchers threw its agent members under the bus, being the first port of call for irate customers yet being blameless in not providing refunds.

Agents and some operators had been on the frontline, first repatriating customers and then rebooking those customers for later dates. But for those agents whose customers urgently demanded a refund,  chasing non-existent refunds now replaced by worthless vouchers just increased the wrath of customers. Lacking self-awareness Abta insisted that they would bring to book any Abta member that breached their new refund rules, but these rules are open to interpretation and refunds dates are now a moveable feast and anarchy reigns.

I’m not attacking any individuals, Most are good people and know the right thing to do but they have been placed in an invidious position by the incompetence and precarious financials of the airlines and global players. Abta has expertise and an excellent team but it serves and is influenced by global players, whom represent a small proportion of its members, albeit with large sales. These global players have now become part of the problem, not the solution. UK owned agencies and operators have been disenfranchised. Abta has  sacrificed the many for the very few. It’s reputation and that of it’s members is now in tatters just to accommodate its main influencers. Abta needs to reorganise to become more representative of the industry.

Some Abta members such as Kuoni (UK), have refunded customers indicating that ABTA’s voucher scheme was not unanimous. , Kane Pirie of Vivid Travel refunded his customers and heads a campaign to refund the customer albeit with a grace period to refund, but it doesn’t add anything to customers existing rights.

The industry should now look to find another voice, a voice that is not self serving and is closer to the customer. A voice that embraces the change in how customer money is used and a voice that is courageous and willing to criticise without fear or favour. It needs to be more democratic and to reflect the heart beat of the industry rather than the voice of the global players. The UK travel industry must be committed to change as this must never happen again. Get involved in your own destiny.

In the words of Stephen Covey:

“Without involvement, there is no commitment. Mark it down, asterisk it, circle it, underline it. No involvement, no commitment.”

*All sales figures are approximate and indicative based on the most recent filed accounts available.

Refusing customer refunds is a disgrace

I recently wrote about trust, at the core of all our relationships, it is the emotional glue at the very centre of our family, communities, religion, work and what we buy and sell.

Our great travel industry, the industry that has been so good to me and many others, is now in dire straits.

The travel industry is particularly vulnerable to a stop or slow down, as it has operated as a massive “Ponzi” scheme borrowing and using up-front customer cash to operate. Cash taken from customers booking today for future journeys, pays for travel executed today that was paid for by customers two, three or even twelve months previously.

Airlines net profits exceed $220Bn in the last ten years. In addition estimated revenue for the worlds airlines in 2019 is estimated at $838Bn. If only $700Bn is flown revenue and most of these flights are booked with full payment on average two months in advance (return flights likely to have return sector much further in future) airlines have loans from customers in excess of $100Bn at any one time.

$100Bn!!!

Yet many airlines now refuse to pay legitimate refunds to customers or to agent/Atol holders who in turn are legally bound to refund customers for cancelled “packages”. Why is this? I suspect they don’t have the money or they feel their survival depends on conserving cash and the easiest to execute is to refuse refunding. They’ve spent all that money and have been imprudent by not managing for recession or a catastrophe.

Bloomberg reports the good times have been wasted.

“Instead, American blew most of its cash on a stock buyback spree. From 2014 to 2020, in an attempt to increase its earnings per share, American spent more than $15 billion buying back its own stock. It managed, despite the risk of the proverbial rainy day, to shrink its cash reserves. At the same time it was blowing cash on buybacks, American also began to borrow heavily to finance the purchase of new planes and the retrofitting of old planes to pack in more seats. As early as 2017 analysts warned of a risk of default should the economy deteriorate, but American kept borrowing. It has now accumulated a debt of nearly $30 billion, nearly five times the company’s current market value.”

Atol holders, agents and operators alike that “tailor make” itineraries are little risk to the ATT (Air Travel Trust fund) but are treated disproportionately to large operators that take excessive risk by committing annually to thousands of flights and bed-nights. Some Atol holders may own an airline or own a portfolio of hotels.

Airlines and global operators have successfully lobbied governments to create an unlevel playing that fails to reflect the risk profile of the industry.

Airlines are now canvassing government for a bail out, yet they still retain billions in customer unflown revenue. If  banks or governments refuse to come to their rescue US carriers might seek Chapter 11 (Between 2002 and 2011, American, Delta, Frontier, Northwest, United and US Airways all filed for Chapter 11). In the UK Administration would apply, but in both cases customers would become unsecured creditors of the airlines for withheld refunds, in effect customers would lose their money. The liability would then lie with the Atol holder who unable to receive refund from airline would probably go bust leaving the taxpayer to stump up the money.

Regulators need to look at the whole problem. The biggest single problem is that airlines, the travel industries “Masters of the Universe” have spent money that’s not theirs. Conventional businesses only crystallise profit when they have supplied the goods. Airlines use the cash by promising to deliver good or services in the future.

The recent Air Insolvency Review is impractical, irrelevant and an embarrassment in its conclusion.

Abta has now appealed  to the government for changes to Atol refund rules. It poses as a protector of customer money when in reality it couldn’t control TUI or Thomas Cook, its two largest members, in breaking its Code of Conduct and damaging its fellow members. Abta is no longer fit for purpose, since its takeover by the Federation of Tour operators its agent members have become secondary. Now is the time for agents to become in control of their own destiny.

The industry is now suffering from its own virus and its very survival and trustworthiness is at stake.

The present bonding situation is untenable, it is unrealistic to bail out the airlines yet leave the financial liability at the feet of the Atol holder. Airlines should be bonded and be forced to place customer money in a trust account. There is no better time to enforce these changes than when the begging bowl is out.

A public that mistrusts the industry in future will be far more damaging in the long term than any financial impact at present.

I recently wrote an open Letter to Travel Counsellors regarding their attitude, self-belief and how they must tackle the present crisis.
I thought I might outline a few guidelines to protect your present business and even grasp opportunities that will expand it.
Firstly if you are a travel consultant your main advantage is that you are contactable. Yes, that is one of your advantages. Many consultants might try to avoid the customer at times but this is an opportunity to differentiate yourself from the digital agent. Contact is an opportunity so step forward and ask how you can help.
You should have built trust with your existing clients, if you haven’t then you need to. Trust is the glue that binds the customer to you.
There is actually a trust equation: (see https://trustedadvisor.com/why-trust-matters/understanding-trust/understanding-the-trust-equation)

I hope this is self-explanatory as it is the most important quality in any sale by an agent.
Credibility is your honesty, your credentials, your experience.
So what to do in the present crisis. In the words of Woody Allen “Showing up is 80% of life” in other words be there for your customer at their convenience. Listen to their problems. Keep in touch, promise to call back, give the customer a time and call back at that time. That’s showing reliability. 
If there is a problem then empathise, explain the position and try to be constructive. Many customers will rebook for a later date, some will not be willing to. Remember these are customers that you should keep for life. There is no need to be confrontational, be nice, you are nice. If you’re not you shouldn’t be in hospitality.
Reliability is always do what you promise, if you can’t, admit you can’t, so contact your customer and tell them. Honesty builds trust.
Intimacy creates authenticity, show you are human, you have a dog, children, show your vulnerability but your expertise in your core competency. 
Self Orientation is being selfless, putting the customer before yourself, even disadvantaging yourself for the sake of your customer. 
All this builds a trusting relationship, one in which a customer will want to invest in just as much as yourself. Give something to your customer such as a kind gesture, a birthday card , a small gift and your customer will want to reciprocate. Give you a booking, a referral or just strengthen that bond you are building.
As this crisis takes its toll on business it actually strengthens the human bond between people, the humanity of people, though six feet apart, is the real story of this crisis.
People are looking for emotional connection, they want you to be there for them and that will only increase in the future. What about you? Well you will love it, you will be rewarded by being fulfilled yourself emotionally and also financially.
Enjoy yourself, the world of travel has been a great place to be in the past and will be great in the future. For now, build those trusting foundations with customers, a trust that will last forever.

Dear Travel Counsellors,
I have been asked by a number of you to just write a few words about the present situation. I do it as I still hold the TC family as very special.
These are unprecedented times but if there is one catastrophe that would highlight the need for a trusted travel consultant it would be this.
Remember this is when you excel, this is when customers want and need your help and those that booked themselves will wish they’d booked through you. This why customers book through agents, a big part of the deal alongside your experience is that you will be there for them if something goes wrong.
This is exactly why you became a travel consultant. This is the time when you can strut your stuff and customers want you to. This is your stage, your competency, do your job, enjoy and take the applause.
I know it’s difficult, but put the temporary issue of income at one side. I’m sure those in control at head office will come up with measures that will help. As you know everyone is busy but don’t worry, all will be okay. Many consultants will lose their jobs and you are still employed by yourself. You are in charge of your own destiny still. Hiccups happen in business but you still have a job, you still have customers, you still have a business. Now you must look to protect it and build it stronger.
You are working for a better life for you and your family, not just for the short term but for a year, five years, ten years. So you build your business now by doing the right thing now for future business.
People will start to travel again and if you have done the right thing more customers will realise your value. Give your present customers bragging rights to brag about you. You might not be able to solve everything but your authenticity and your willingness to persevere will shine through, you will retain customers and they in turn will refer you to others.
But now is the time to be fulfilled, to make your family proud of you and be proud of yourself.
Believe in yourself, people want you to care and they want someone they can trust. Trust is what you sell.
Credibility that you are part of a bigger company, reliability that you are always there and selflessness, meaning you will put your customers before yourself are the component parts of Trust.
Call your customers and chat to them,  just keep in touch. Don’t try to sell anything, your role now is to reassure, care, help and connect as they want someone to trust. This is the time to go beyond being a travel agent, you are a caring person and a phone call when you don’t have to make it will show your humanity and you’ll feel good. Tell them where they can get toilet rolls or just tell them you are at end of the phone. Be that person you are proud of, everything will turn out even better in future. More than business you will feel better about yourself and in control.

Stay positive not just for yourself but also for others. Customers need you to be positive and so do fellow TC’s. It’s easy to slip into negative thoughts but that will just be self-defeating, why score an own goal? Remember it’s your business, you empower yourself to set the tone around you. Call your fellow TC’s, laugh at the situation and talk about the opportunities and good times in the next few months. Include every TC. Call a TC that you have not previously spoken to, just like customers some want reassurance, many want to know that out there, others are handling the predicament. A problem shared is a problem halved but better, an opportunity shared is an opportunity doubled.
You are fantastic, just make your customers have it, believe in yourself, you can do it. That’s why you took that step to work for yourself, so now work for yourself.
God bless
David

Most people know what that means but depending on which side of the table you sit on the answers can vary widely.

If you are a customer then you know what you expect of a company. You expect that promised goods or services are delivered on time and in good condition and if something goes wrong it is fixed and fixed to your satisfaction.

Most companies would agree with that but the fixing is in the detail. So many companies are driven by the mantra of “shareholder value” that many fixes are sometimes shabby and minimal and are completed at the cheapest possible cost rather than “doing the right thing”.

I always operated on the basis that doing the right thing by the customer was treating them in the way I would want to be treated. Once we knew how to fix an issue there was a quick calculation that we could afford it (it wouldn’t bust the company) and we worked from there. It was a matter of integrity, reputation, pride and an opportunity to show a customer how much we cared. Of course once we knew it was affordable we would then try to reduce the cost to us but without effecting the customer fix. It was essential that we found an effective solution but always “doing the right thing” by the customer.

Of course many companies tackle problems by being a reluctant and tight-fisted fixer, but what effect does that have on your reputation? Reputation is surely part of the credibility and the marketing value of the company. .

So many companies are driven by protecting shareholder value by looking at the specific cost of fixing a problem but in the long term this impacts on the reputational value of a business.

Not doing the right thing creates mistrust in customers.

An excellent article about “Doing the right thing” from Unherd 

Doing the right thing by the customer is indeed the right thing.