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“Future Fund contributions must be suspended”: ACTA, CATO renew calls to reform Ontario’s Comp Fund in light of pandemic By Cindy Sosroutomo TORONTO — In a year that saw the global grounding of planes, the closure of international borders and a halt on tours and cruises around the world, there’s no question that the COVID-19 pandemic has devastated the travel & tourism sector, across the chain, at all levels. Here in Canada, with littleto-no bookings coming in, over 800 store-front travel agency locations have been forced to close from March 2020 to March 2021, while members of CATO (Canadian Association of Tour Operators) and other tour operators are faced with year-over-year revenue drops of more than 90%, says CATO Chair Brett Walker. With many travel and tourism businesses being forced to shutter their doors, concerns over consumer protection are at an all-time high as travellers scramble to get refunds for cancelled flights, cruises and tours. In the case of Ontario retailers that were unable to provide travel services due to bankruptcy or insolvency, Ontario’s Compensation Fund, put in place to cover such an event, serves as a much-needed safety net for consumers. But with an increase in business closures, is the Fund enough to cover claims during travel’s worst-ever crisis? According to Richard Smart, President and CEO of TICO, which administers the Compensation Fund, claims for the past fiscal year have been relatively low and that the process related to consumer claims against the Fund hasn’t changed since the start of the pandemic. As of March 2020, the Fund sat at $23.5 million and “there have been no material changes to the Fund since that time.” TICO will reveal current financials at its upcoming AGM, scheduled for June 29. Ontario’s Compensation Fund has been a point of contention in the travel industry for years, particularly among Ontario’s registered travel agents and wholesalers who’ve been tasked with the responsibility of financing it. As per the current funding model, registrants are paying $0.25 per $1,000 gross
sales, with Fund payouts limited to a maximum of $5,000 per claimant – often not enough to cover the cost of a single trip – and a maximum of $5 million (plus $2 million per repatriation) per event. In contrast, Quebec’s Compensation Fund for Customers of Travel Agents, which is based on a consumer-pay model (consumers pay roughly $1 per $1,000), sits at a very healthy $150 million, so healthy in fact that the OPC (Office de la protection du consommateur), the governing body that oversees the Fund, stopped taking contributions a few years ago. But, even $150 million isn’t enough to cover the cost of a pandemic, says ACTA president Wendy Paradis. “There are over 35,000 claims [in Quebec] totalling over $100 million. With a maximum payout of claims at 60%, the $150 million Fund would have also resulted in ‘cents on the dollar’ for a consumer claim,” she says. “The difference, however, is that the Quebec Fund would quickly begin to replenish as the nominal fee charged to the consumer per booking is reinstated.” For this reason, Paradis is lobbying
for a consumer-funded model like Quebec’s and believes that industry contributions should be eliminated. “Travel consumers are the beneficiary of the Fund and should therefore pay into it,” she adds. “Cancelling the industry contributions will signal that Ontario is open for business, it will grow the economy and will reduce red tape, leading to the creation and protection of good jobs across the province. Failure to act will continue to put Ontario travel companies at a disadvantage and will jeopardize jobs in an extremely competitive industry with very tight margins. “The Government of Ontario should take this time to make the necessary changes, which would provide travel agencies with much needed breathing room to get back on their feet. Future Fund contributions must be suspended to support the recovery of Ontario travel businesses.” To its credit, TICO – following new funding from the Ontario Government – has waived annual registration renewal fees and Compensation Fund payments for registrants, but only until March 31, 2022. Payments during this June 3, 2021 | TRAVELWEEK | 3
