TTG - Travel Trade Gazette
For Smarter, Better, Fairer Travel
Search
User Menu
Remember me

New to TTG?

PPA Independent Publishing Company of the Year 2019

Hello! You are viewing your 1 free guest article this fortnight


Please log in or join now for free, immediate and unlimited access to our award-winning online content. Find out more...

Join us
Already a member? Log in here

The best way to learn from Thomas Cook and safeguard your agency

Agreements between agents and tour operators are crucial to protect both parties, as the Thomas Cook failure proved.

TRFBLI

The Thomas Cook failure highlighted a number of flaws in the way tour operators and travel agents deal with each other – which was ultimately to the detriment of customers.

 

To prevent this happening again, agency agreements must be updated.

 

In the pipeline

One of the main issues that arose from Thomas Cook’s collapse was its practice of requesting customer payments early and holding them for a significant time period.

 

While payments are held by the agent (commonly known as “pipeline monies”), they are at risk if the agent was to financially fail – unless financial protection is put in place, such as Abta’s retail agent financial protection scheme.

 

In order to provide protection, the following payment terms must be included in the agency agreement:


Related stories

Be wary of hotel cyber security, experts tell agentsBe wary of hotel cyber security, experts tell agents
Farina Azam: Tour ops and travel agents – data sharing is not a breach of GDPRFarina Azam: Tour ops and travel agents – data sharing is not a breach of GDPR

Farina Azam, partner and travel lead at Kemp Little
Farina Azam, partner and travel lead at Kemp Little

Remittance within 14 days: agents should be contractually obliged to pass all customer payments on to the tour operator within 14 days of receipt.

 

If the agent is bonded with Abta, pipeline monies will only be protected by its financial protection scheme as long as: the tour operator did not offer any credit terms to the agent; payment is remitted within 14 days of receipt from the customer; and the tour operator chases any outstanding payments regularly (and in accordance with Abta’s credit control procedures – visit abta.com for more information).


Prohibition on agents collecting payments early: agents should not be permitted to collect customer payments before the balance due date (or to offer incentives or discounts to customers to make early payment), and if customers do make unprompted payments before the balance due date, this should be remitted to the tour operator within 14 days of receipt by the agent.

 

This reduces the risk of an agent financially failing while holding pipeline monies.

 

Tour operators cannot prevent agents from offering discounts or incentives more generally: to do so would be a restraint of trade.

 

Provided agents still pay the net sum to tour operators, agents are permitted to offer discounts and incentives to win bookings – but they must still remit those payments to tour operators in accordance with the agency agreement’s payment terms.

Passing on documents

When Thomas Cook failed, there was confusion among customers about who their booking was with, with many not realising their holiday was actually with a third-party tour operator and could still be provided.

 

To reduce the risk of this happening again, there should be a contractual obligation on agents to pass on to the customer the tour operator’s confirmation invoice and other paperwork that makes it clear the customer’s contract is with the tour operator.

 

If the agent issues their own paperwork to the customer, they should make it clear that they are acting as an agent on behalf of the tour operator (this is also critical from the agent’s perspective to ensure they don’t end up liable to the customer for provision of the holiday – and to protect the agent’s Toms status).

Data sharing

To ensure data sharing between the agent and tour operator is GDPR-compliant, there should be properly drafted data sharing clauses in the agency agreement.

TRFBLI
Email feedback@ttgmedia.com and let us know your thoughts or leave a comment below
Please sign in to comment.

Our Next Events

TTG Luxury Travel Awards

TTG Luxury Travel Awards

TTG New to Touring & Adventure Festival

TTG New to Touring & Adventure Festival

Luxpo London

Luxpo London

TTG Top 50 Travel Agencies

TTG Top 50 Travel Agencies

TTG Luxury Experience

TTG Luxury Experience

TTG Diversity & Inclusion in Travel Conference

TTG Diversity & Inclusion in Travel Conference

TTG LGBT Seminar

TTG LGBT Seminar

The Travel Industry Awards by TTG

The Travel Industry Awards by TTG

TTG - Travel Trade Gazette
For Smarter, Better, Fairer Travel
TTG Media Limited.
Place of registration: England and Wales.
Company number 08723341.
Registered address: 6th Floor, 2 London Wall Place, London EC2Y 5AU