Introduction
The Consumer Council (CC) is pleased to submit its response to the Travel Industry Compensation Fund Management Board (the Board) regarding the public consultation on "Travel Industry Compensation Fund Proposals to Enhance Traveller Protection and Facilitate Trade Development"
CC's Comments
Ensure cost savings to travellers are provided
CC welcomes any proposals to lessen travellers' expenses and strengthen the protection of the travelling public against travel agents' default. CC is of the view that cost savings arising from the levy reduction of the Travel Industry Compensation Fund (Fund) should be passed on to travellers.
Increase ex gratia payments to outbound travellers
CC welcomes the proposals of increasing the maximum amount of ex gratia payments from $40,000 to $100,000 to enhance the protection for outbound travellers, and of removing the restriction on the number of relatives making compassionate visits to enable more of travellers' relatives to help deal with the aftermath of travel accidents.
Whilst the proposed measures would make greater protection available to the travelling public, CC believes it is important for the Board to put in place a control mechanism to prevent abusive use of the ex-gratia payments.
CC suggests that the Board should spell out clearly the rules for usage of the ex-gratia payments (such as whether there would be any amount limit per relative for making compassionate visits or any criteria for determining the order of claims received from a number of relatives), to enhance scheme transparency for the benefits of the travelling public.
Having said that, the Board should give due consideration to the genuine needs of travellers and their relatives under special circumstances (e.g. to provide flexibility to traveller's relative who requires ex-gratia payment beyond the maximum amount per relative to pay for several compassionate visits when the need arises).
Further, the Board should make clear to travellers that the additional protection to be offered under the Fund should not be treated as a replacement for travel insurance and travellers should take out travel insurance based on their individual need.
Advance authorization by outbound travellers
From the perspective of traveller protection, CC considers the introduction of a new advance authorization arrangement to enable travellers to give the necessary authorization to his or her representative before departure on an outbound package tour is practical, as this would help address situations where injured travellers may not be capable to give the requisite authorization to allow for application for ex gratia payments.
CC shares the Board's view that this new arrangement should be widely publicized to increase travellers' awareness of the details and benefits of the arrangement so that they would give prior authorization as appropriate.
Strengthen the level of traveller protection
As the current Fund balance has already reached the proposed buffer level, CC considers that the time is now appropriate for the Board and the Government to examine if the present level of traveller protection is adequate in ensuring any potential risks to be faced by the travelling public is well covered by the Fund.
CC notes that the consultation document has mentioned the issue of expanding the scope to cover the risks of travellers purchasing single travel service item from travel agents. However the issue is not included in this consultation exercise for the reason that it falls outside the statutory ambit of the Fund.
Another reason given for not including the issue in this consultation exercise is that the Travel Industry Council of Hong Kong (TIC) has recently (April 2007) put in place an arrangement requiring travel agents who are wholesalers of air tickets to honour tickets issued by their ticketing retailing agents when the latter default. CC is concerned that this guarantee arrangement offered by wholesalers may not provide sufficient protection to travellers. For instance, protection to travellers would not be available if the wholesaler themselves are in default, or travellers are not able to present to the wholesalers (due to various reasons) any proof of air ticket purchases from the ticketing retailing agents or get back their deposits from the wholesalers.
Notwithstanding the TIC's views that "there is no imminent need to include single purchase of air tickets from travel agents under the coverage of the Fund", the consultation document has not provided any statistics to support this view. CC considers that the Board should explore whether the above-mentioned travellers' preference has become a norm (in term of the number of travellers and amount paid for singly purchased tickets) by collecting market statistics (if it has not already been done) to assess if there is a genuine need to strengthen protection in this respect.
With the growing popularity of travellers buying singly air ticket or hotel accommodation from travel agents to suit their own style of travel (instead of joining guided package tours), a growing area of risk has emerged. CC urges that the Board and the Government should take steps to address such risk by eliminating gaps in traveller protection.
Overseas experience
Referring to travel compensation arrangements in some overseas jurisdictions (namely Australia, Canada-Ontario and US-California), it is observed that these jurisdictions provide wide-ranging traveller protection to consumers who purchase travel services including travel by air, land or sea, either singly or in conjunction with other travel services, like hotel accommodation or car rentals. In these jurisdictions, consumers who have paid to a licensed travel agent for travel arrangements will get compensation in respect of financial loss suffered if the travel agent has failed to deliver paid travel services.
CC is of the view that non-inclusion of singly purchased item from travel agents would lessen the protection afforded to the travelling public in Hong Kong and is not conducive to protecting travellers from travel agent default. CC urges that the Board and the Government should explore the feasibility of expanding the scope of the Fund in this respect.
Issues for future consideration of the Board and the Government
CC understands that the Board's jurisdictions are confined to the scopes as prescribed in the Travel Agents Ordinance. Nonetheless, from the perspective of protecting the interests of travellers, CC considers it important for the Board and the Government to keep abreast of the changes in the travel service market to ensure the travelling public is adequately protected.
In making effective use of the Fund for the benefits of travellers (particularly at a time when the Fund is adequately funded), CC considers the following list of issues should be accorded priority by the Board and the Government for the long term development of traveller protection in Hong Kong. These issues, if adopted, will be useful to enhance the existing level of protection to the travelling public. The issues are:
Explore and consider extending the protection of the Fund to include the provision of emergency assistance (e.g. to arrange free of charge charter flights for stranded Hong Kong travellers in politically turbulent areas, to cater to the needs of travellers under quarantine in foreign countries) to cover unforeseen circumstances under which travellers abroad may need special assistance;
Conduct a comparative analysis of overseas travel compensation arrangements against Hong Kong's system, with a view to identifying best practices for protection of travellers in Hong Kong; and
Review and recommend changes to the scope of the Fund, to determine where enhancements are necessary to ensure travellers are adequately protected.
