It is not my function to regulate capacity or competition in the holiday market nor do I have statutory powers to do so. My role derives from the Transport (Tour Operators and Travel Agents) Act, 1982. This was enacted to deal with the issue to which the Deputy refers and it has worked well since its inception.
Prior to the 1980s, the collapse of travel agents and tour operatores was an all too frequent occurrence and there was no protection for people on holiday or those about to travel. The 1982 legislation has produced an important and highly successful mechanism whereby holidaymakers' interests and money are protected. It has enhanced consumer confidence in the industry and fostered stability within the travel industry.
All tour operators and travel agents operating here are licensed by my Department under the Transport (Tour Operators and Travel Agents) Act, 1982, every single one of them must obtain a new licence once a year. When renewing their licence their financial and organisational structure is reviewed. This is to establish as far as possible that they have the wherewithal to operate in this very competitive market and are likely to sustain their businesses through periods of slack trading or intense competition. I assure the Deputy that, where my Department is dissatisfied with the level of investment in the firm, its operating costs or its cashflow projections, we require the operators to take corrective measures before the licence is renewed.
Leaving that aside, the real security for the general public comes from the 1982 Act. All licensed operators are required, before their licences are granted, to take out a bond to cover a set percentage of their projected turnover for the duration of the licence. This bond can be in the form of an insurance policy, a bank guarantee or a straightforward cash deposit with my Department.
The bond cannot be touched by the operator and is administered solely by my Department. It is there for two clear purposes; first, it is used to repatriate travellers who find themselves abroad on holiday in the event of the collapse of the tour operator or travel agent with whom they have done business, second, it is used to refund full payments or deposits on holidays made by the travelling public in the event of a collapse.
Despite the fact that licences expire annually and an analysis of the financial performance of licensees is undertaken by my Department once a year, business failures can sometimes occur. In a further effort to avert this, the financial performance and business projections of tour operators and travel agents are monitored during the year. Should it become evident that the turnover of the firm in question is running ahead of projections made when the licence was issued, and hence, that the bond may not be adequate to cover the cost of potential collapses, the firm is required to increase its level of bonding with immediate effect.
A further safeguard to ensure the interests of the public are protected lies in the existence of a special travellers' protection fund which was also provided for by the 1982 Act.
This fund is available to my Department solely for the purposes of supplementing the resources that become available from the operators' bond when an operator ceases trading. I am pleased to say that there is now over £4 million in the fund, safely invested by the State as an added protection to the travelling public. Indeed, such was the buoyancy of the fund that as early as 1986, it was possible to suspend the collection of moneys for it which has been achieved by a levy on holiday sales. I am glad that since then, the bonding mechanism has been so successful in dealing with the small number of collapses in the travel industry that it has not been necessary to renew this levy.
As regards the current media coverage of the likely activity in the travel industry this year, I draw the Deputy's attention to further more recent legislation. The Package Holidays and Travel Trade Act, 1995, strengthens the position of consumers' interests as regards false advertising and inadequate information on holidays being purchased. The Act gives an important role to the Director of Consumer Affairs in ensuring that the travelling public get what they pay for and are treated honestly and fairly when buying holiday packages.
The potential problem in the travel industry which has been reported in the media of late is the risk of a mismatch of capacity and demand for the coming season on the part of the industry itself. The controls exercised by my Department are not intended to intervene in normal market activity.
