TRAVEL agencies may soon have to take out insurance against sudden closures to protect their customers, if the Consumers Association of Singapore’s (CASE) push for such a measure is successful.
Following the abrupt closure of travel and coach company Five Stars Tours which left thousands of travellers in the lurch (TTG Asia e-Daily, January 10, 2014) last month, Case intends to first roll out the scheme to 16 CaseTrust accredited travel agencies before extending it to the rest of the industry, reported local broadsheet The Straits Times.
As of December last year, there were 1,154 licensed travel agencies here.
Ong Ling Lee, director, travel agents and tourist guides, Singapore Tourism Board (STB), said: “As an industry-led initiative, the pre-payment protection scheme is one which we welcome as a possible solution for consumer protection…STB will study it more carefully as there are wider implications to be considered.”
Clifford Neo, managing director of Dynasty Travel, said: “This (insurance scheme) may not address the root of the problem as there is still a lack of proper audit by relevant regulatory authorities on what some travel consultants do with money they collect upfront.”
Chan Brothers Travel’s manager for marketing communications, Jane Chang, said: “Deposits or advance payments are not peculiar only to the travel industry because principal suppliers request for cash upfront from travel consultants to guarantee seats, rooms and tours before departures.”
Nevertheless, for travel consultants to attain credibility, Chang suggested STB could raise the bar of entry into the industry. For example, she said STB could increase the paid up capital from the current S$100,000 (US$79,000) to at least S$1 million as part of conditions for application of the Travel Agent (TA) licence, or perform an audit to ascertain financial health of all TAs before renewing the licence.
Robin Yap, managing director, The Travel Corporation Singapore, said: “This insurance will help restore confidence in buying travel products for consumers but there is also the need for insurance companies to offer affordable premiums for travel consultants.
“(Because) at the end of the day, it has to make business sense,” he added.
