Merchant Service Providers in the Travel Trade in Ireland: Discussion

The first session is a discussion is on merchant services providers in the travel trade in Ireland. The purpose of today’s meeting is to discuss with the Commission for Aviation Regulation, the role of merchant service providers in the travel trade in Ireland. This is part of the committee's ongoing work on the impact of Covid-19 on the aviation travel industry sectors. On behalf of the committee, I welcome to today's meeting Ms Cathy Mannion, commissioner of the Commission for Aviation Regulation, CAR, and Mr. David Hodnett, deputy commissioner of the Commission for Aviation Regulation.

I will now read the note on privilege. Witnesses are reminded long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name, or in such a way as to make him, her, or it identifiable, or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if their statements are potentially damaging to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction. For witnesses who are attending remotely from outside of the Leinster House campus, there are some limitations to parliamentary privilege. As such, they may not benefit from the same level of immunity from legal proceedings as a witness who is physically present does. Witnesses participating in this committee meeting from a jurisdiction outside of the State are advised that they should also be mindful of their domestic law and how it may apply to the evidence that they give.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside of the House or an official, either by name or in such a way as to make him or her identifiable. I remind members of the constitutional requirement that members must be physically present within the confines of the place which Parliament was chosen to sit, namely Leinster house and-or the Convention Centre Dublin, in order to participate in public meetings. I will not permit a member to participate where they are not adhering to this constitutional requirement. Therefore, any member who attempts to participate from outside of the precincts will be asked, reluctantly, to leave the meeting. In this regard, I ask any member partaking via Microsoft Teams that, prior to making their contribution to the meeting, they confirm that they are on the grounds of Leinster House campus. For anyone watching this meeting online, Oireachtas Members and witnesses are accessing this meeting remotely. Only I, as Chair, and the necessary staff essential to running the meeting are present in the committee room. Due to these unprecedented circumstances, and the large number of people attending the meeting remotely, I ask for everyone's forbearance should any technical issues arise. However, it has been pretty good of late.

I now call on Ms Mannion, who has roughly five minutes.

Ms Cathy Mannion

I thank the committee for the opportunity to tell it about what we do in relation to the travel trade sector. By way of background, the Commission for Aviation Regulation was established in 2001. We have a number of duties. These including the following. We set the maximum price the Dublin Airport Authority, DAA, can collect from airport charges at Dublin Airport. We review the costs and revenues of the Irish Aviation Authority, IAA, as air navigation service provider. We license Irish-based air carriers and authorise ground-handlers. We investigate complaints about flight cancellations, delays of at least two hours, and instances of denied boarding. This is more usually referred to as "EC-261 rules". We investigate complaints about assistance received by passengers with reduced mobility. We license travel agents and tour operators established in Ireland and administer a bonding scheme for licensed travel agents and tour operators. We process claims if a travel agent or tour operator goes out of business. I now turn to describe our work in relation to the Irish travel trade sector.

Tour operators and travel agents established in Ireland apply to our organisation for a 12-month contract. These licences are usually renewed in April and October of each year. We spread them out between the April and October round. We issue a licence when the company has fulfilled certain criteria. This licensing framework has been in place since 1982, although it has been updated over the years to reflect the ongoing monitoring requirements and a number of European directives that came into play in the intervening years.

To give the committee a feel for the number of licences, in 2020, we issued 181 licences - 24 for tour operators and 157 for travel agents. This is a reduction compared to 2019 when we issued 211 licences. During the year, we monitor our licensees, where they provide us with a variety of information, including monthly and quarterly management accounts and audited annual accounts. This is our only role in relation to solvent tour operators and travel agents.

We have a second role and this is where, unfortunately, a tour operator or travel agent is unable to fulfil its obligations to its customers and becomes insolvent. As part of the licensing process a tour operator is required to put in place a bond calculated as 10% of its projected licensable turnover. Effectively, that means its forecast future sales for the years ahead. It must give us a bond for 10% of that amount. For travel agents, a figure of 4% applies. These same figures have applied since the 1980s. In the event that a tour operator or travel agent becomes insolvent, we call on their bond to cover the cost of consumer claims. Where the bond is insufficient, there is also in place a travellers’ protection fund. This is used to cover legitimate claims, where the size of the claim exceeds the amount of the bond. In this way, the customer is completely covered for legitimate claims. In principle, the insolvency protection arrangements cover packages - for example, accommodation, flights and transfer from the airport to the hotel would be considered a package - where travel starts in Ireland and where the package has been cancelled due to the insolvency of the licensee. There are some requirements that need to be met for the claim to be included in the scheme. In addition, flights from Ireland, booked through a licensee are also covered. It is important to bear in mind, though, that certain sales are not covered. These include accommodation only, and items such as visas and insurance. The important factors are it is a package, the travel starts in Ireland, and the package is cancelled due to the insolvency of the licensee.

Under secondary legislation dating back to 1983, claimants have 60 days from the date of the collapse to make a claim to us.

We are in the process of extending the claim period to 120 days to provide affected customers with more time to submit a claim to CAR. In fact, we have had that in place since Monday of this week and it has been completed. One of the concerns raised by merchant service providers was that we had only a 60-day period. We have now extended that period to 120 days, which aligns with some of the period they apply for customers making a claim to them, something I will come to later.

In June 2020, the Government introduced a refund credit note scheme. This allows licensed tour operators and trade agents to offer refund credit notes to their customers where a booking has been cancelled due to Covid-19 travel restrictions. By voluntarily accepting a note, customers could book another package holiday in the future and the Government will back the value of the note in the event of insolvency. This arrangement was put in place to provide additional support to travel agents and tour operators, which are required, under a recent European directive, to provide a refund to customers in certain circumstances . This arrangement allowed them to offer their customers a refund credit note and that allowed the companies more time to get their own rebate from their suppliers. At the same time, the Government provided that the travellers' protection fund would be maintained, which was another important aspect of the additional arrangements put in place last year.

As the committee will be aware, merchant service providers give travel agents and tour operators the ability to accept debit and credit cards in payment for goods and services and they charge for this facility. I understand, from travel industry representatives, that some providers have required significant upfront financial security deposits. CAR is not a party to these discussions and does not play a role in these commercial relationships. It is a matter between the merchant service provider and the business in question.

There is one point of interaction between merchant service providers and CAR and this relates to how consumer financial protection arrangements operate in the event of a travel agent or tour operator becoming insolvent. Following an insolvency, an affected customer may seek to recover moneys from us or from the merchant service provider. If the customer submits a claim to CAR, it falls under the insolvency protection arrangements. The customer may also request the credit or debit card provider to consider reversing a transaction because the travel agent or tour operator has not delivered the services paid for. This is called a charge-back.

In early 2016, in discussions with some merchant service providers, we provided clarity on how our two processes should work. We agreed that CAR would be the first point of contact for the customer. Therefore, if we determined that the customer should be paid under the insolvency protection arrangements, the customer would then not be considered in the charge-back process. This gives clarity to the merchant service provider that the person will come to us first and we will determine whether he or she is part of our scheme. If the person is part of our scheme, he or she will not be included in the merchant service provider scheme. If we determine that the claim is not covered in whole or in part under the insolvency protection arrangements, we notify the claimant accordingly and he or she can provide this information to his or her credit or debit card issuer where he or she chooses to explore the charge-back route. This is an important point. In this way, we provide clarity to the merchant service provider about what our role and its role are, and we are the first point of contact. It goes through our service first, before going down the charge-back route.

As for our process for reviewing claims, when a travel company becomes insolvent, its customers can access a claims form on our website, We then assess each submitted form, together with all supporting documentation such as receipts, itinerary and proof of purchase. At the end of this process, we decide whether the claim can be settled in full, in part or rejected, and we notify the claimant accordingly. The claimant has an opportunity to have the decision reviewed, and in a number of cases, we have reviewed decisions.

At the end of this process, if the claim is not covered in whole or in part by Ireland's insolvency protection arrangements, and if the claimant has paid by credit or debit card, we suggest they may be entitled to a charge-back from his or her bank and that the claimant contact his or her bank if this is the case. We suggest they provide the bank with our communication as evidence that the claimant does not have a claim under the bond or refund credit note scheme of the insolvent travel company.

It cannot be any clearer than that. The consumer goes through our process first. If they get the money from our process, all well and good, and if they are not eligible under our scheme, we communicate this to them and he or she brings that to the bank in order that the bank will know that the consumer has been through our process first. In addition, where we can, we have provided any necessary clarity to merchant service providers that have contacted us over the years about how Ireland's insolvency protection arrangements work and what is covered by the scheme.

I will conclude with a summary of recent insolvencies. In 2020, six collapses resulted in claims, the largest of which was USIT Travel Limited, which ceased trading on 27 March. In total in 2020, we received more than 3,600 claims and these have been closed out. In 2021, there has been two insolvencies, the later of which was Joe Walsh Pilgrimitours Limited, which ceased trading on 27 April. To date, we have received roughly 2,489 claims relating to Joe Walsh Pilgrimtours Limited. We are reviewing these claims and have started to pay out on them.

I hope the committee now has a clear view of our role in respect of the travel trade in Ireland.

I thank Ms Mannion.

I thank Ms Mannion. This meeting was prompted by concerns raised by the travel agency sector. Ms Mannion referred to significant sums. The sector is reporting that in some instances, a cash security of €1.5 million is being sought at short notice. It has expressed concern that this may have an impact on the sector and that it may, in fact, contribute to and cause failures within the sector. It has raised a further concern that there has been no indication or basis outlined for the decisions being made by the merchant service providers. There have been references to risk but there is no proof of that risk and no clear indication. There has been a suggestion that a differentiation has not been made between the bonded system here and the non-bonded system elsewhere, or between Britain and Ireland. The processes employed in Britain are just being transferred to Ireland in an entirely different context, and that is of concern.

Is the commission aware of that concern? Does it share that concern for an industry for which the commission has responsibility in licensing? Does Ms Mannion have an opinion on how that issue could be resolved? What level of engagement has the commission had with the merchant service providers, for example, and what have been their asks? I note the point about the 60-day period versus the 120-day period. Have there been any other requests? What useful role can the committee play in supporting efforts to find a quick resolution to this issue?

Ms Cathy Mannion

As I said, CAR does not have any part to play within the commercial arrangements between the merchant service providers and the travel trade.

For our part, we need to try to be as clear as possible about what we do. In 2016, it was very important to have clarity as to whom customers should go first, ourselves or the merchant card providers. Such clarity reduces the risk providers might see in other markets. The consumer comes to us first, we deal with the claim and, where it is not part of the our scheme or arrangements, the consumer can choose to seek a chargeback.

As the Deputy noted, we have moved from 60 days to 120. That was in response to requests from service providers and followed discussions with our Department. I just wanted to say those key things. Our door is always open. If any of the providers want to talk to us about what is in the scheme, what is outside it and the process we use, we are always happy to speak to them. That is as much of a role as we can play in this area.

There are real concerns about this. I do not know who the relevant authority is. Is it the Central Bank, the merchant service providers, MSPs, themselves, the Minister, Deputy Varadkar, or the Minister, Deputy Ryan? Perhaps this can be amended as further contributors come in but I propose that the committee write a letter with regard to this issue which has been identified. There is a real question mark over whether the process here is fair in light of the real risk that exists, given the fact this is bonded sector.

I also ask that the committee write a letter with regard to the cliff edge the sector new faces with the regard to the Covid restrictions support scheme, CRSS. My understanding is that it has been confirmed the sector will not be supported beyond 12 July and so faces a real cliff edge. I am clear this is something on which the Ministers, Deputies Varadkar and Ryan, should be contacted. It is important there be that focus, given the precarious state of the sector as a whole as a result of the implications of Covid.

With regard to the second matter, the CRSS, we will write a letter. That is straightforward. The scheme needs to be extended. On the first item, we may continue with our deliberations and questions and get a complete picture. That is why we have Ms Mannion and Mr. Hodnett before us today. We will then, as a committee, write to whomever we need to write to and do whatever further work we need to do. It is a good suggestion but we are just starting the process.

We will tease it out further for sure. I thank the Chair very much. We can tease that out and hear from more contributors.

We will now move to the Fianna Fáil slot. Senator Horkan has five minutes.

I thank Ms Mannion for her presentation. I am only a new member of this committee so I am not as familiar with the topic as some of the other members but, from what I am seeing, it seems merchant service providers want to have it both ways. If an operator gets into trouble or enters liquidation, the Commission for Aviation Regulation is there, but the MSPs seem to want extra deposits and extra security on top of that. Is that the case?

Ms Cathy Mannion

As I said, we operate an insolvency protection scheme but only for certain packages. Certain things such as accommodation-only packages and insurance are not covered by our scheme. These might be covered by a merchant service provider's chargeback arrangements. As to what they charge for their services, I am not party to that and do not know. All I have heard is what the travel traders have said to the committee.

The commission's role is to provide a service in respect of tour operators, as they were known in the past, operating package holiday arrangements. That is the commission's sole responsibility. Its bonded scheme does not apply to people who book flights separately from accommodation or accommodation separately from flights.

Ms Cathy Mannion

We license the travel agents and tour operators. Our bonding arrangements cover packages and flight-only arrangements.

If an airline were to get into difficulty, the commission would provide refunds.

Ms Cathy Mannion

No, the arrangements apply in respect of the insolvency of a travel agent or tour operator.

Okay. The commission's scheme does not cover airlines that get into difficulty.

Ms Cathy Mannion

That is not covered by the scheme. The scheme has to do with the insolvency of tour operators or travel agents who cannot provide a service.

If a customer has paid for a package deal with a tour operator, everything the consumer has given to the tour operator is covered.

Ms Cathy Mannion

The scheme applies where the package cannot be performed as a result of an insolvency of a travel agency or tour operator. The legislation is quite specific on this point. We have to look at matters case by case. What I am giving the committee today are the high-level principles of how it works. Generally, if a package is booked and the travel agent or tour operator becomes insolvent resulting in it not being possible for the package to be taken, we step in. Sometimes the travel agent might become insolvent but the customer has all the necessary information on the booking and so can go on the holiday. An insolvency does not mean every customer will not be able to take a holiday. It depends on the case in question.

In the case of a tour operator failing, the commission will repatriate people or make sure people can go on their holidays regardless. Is that the case?

Ms Cathy Mannion

We give them a choice between continuing with the package and claiming back the cost of the accommodation when they return - customers generally pay for the flight first so that is generally good to go - and asking for all of their money back if they do not want to go anyway and make a claim subsequently.

With regard to the mechanism, is it the case every travel agent pays into the scheme?

Ms Cathy Mannion

It is for travel agents established and licensed in Ireland. There are many laws involved, some of which date back to 1982. Generally, an agency has to be licensed in Ireland to avail of the scheme. There are other rules that can be enforced in Ireland but I do not propose to get into them today because they involve different sorts of arrangements.

Okay, it involves all tour operators licensed here. How does the levy or the scheme work?

Ms Cathy Mannion

As I said, we license the travel agents and tour operators each year and we monitor their financials during the year. We require them to put in place a bond of 4% of expected turnover for travel agents and 10% for tour operators. We monitor them during the year to ensure the value of the bond is in line with the projected licensed turnover as the year progresses. If, unfortunately, one of these companies becomes insolvent, that money can be drawn down. It is like money in escrow. We have first call on it. We draw down the money and use it to settle claims. If that money is insufficient, Ireland has a travellers' protection fund, which Government ensures is sufficiently funded to cover any excess.

It is not the case that every tour operator puts money into the scheme so that, if one fails, the others pick up the tab.

Ms Cathy Mannion

With regard to the way the scheme currently works, if we go back to 1982, it used to be that only tour operators paid into this travellers' protection fund. Mr. Hodnett might want to step in on that. I believe this arrangement ended in 1987. Since then, the money has been increased over time.

Mr. David Hodnett

Each tour operator or travel agent puts in place a bond relative to its business. The Travellers' Protection Fund was collected in the 1980s. It is a State fund and it sits behind that. It pays out to the customers of the company that happen to be affected by the insolvency.

That happens when there is an issue because of a greater amount than is sufficient from the tour operators bond. Is that correct?

Ms Cathy Mannion


Mr. David Hodnett

That is correct.

Generally speaking, in the past five or ten years has the bond covered the amount? Have the bonds of the tour operators covered the shortfall when something goes wrong?

Ms Cathy Mannion

We looked into this some years ago. We find that we are drawing more on the Travellers' Protection Fund over time. This is perhaps because the way the market operates compared to the 1980s has changed with the advent of the Internet and how people book things. It is something we looked into in the past and we will probably be looking into again with the Department in time.

There was a time in the 1980s when we did not have the likes of Ryanair offering independent flights and people tended to go on their holidays with tour operators far more than they do now. Do we have an idea of how the volume of business has changed? How has it fallen over time in respect of the tour operator market?

Ms Cathy Mannion

No, we do not.

Ms Mannion, do you have any concluding remarks on this question? Many other members are looking to get in.

Ms Cathy Mannion

I do not have those figures but those in the travel industry suggest 10%. Mr. Hodnett will correct me if I am wrong but those in the industry say that licensees have approximately 10% of the market.

My thanks to Ms Mannion and Mr. Hodnett.

We will now move on to Senator Buttimer. He has led on this issue in the committee and asked for the officials from the Commission for Aviation Regulation to come in. Senator Buttimer has five minutes.

I welcome Ms Mannion and Mr. Hodnett to the meeting and thank them for being here. Senator Horkan has covered many of my questions in the context of where we are at today. I believe the merchant service providers are being disingenuous and unfair to the travel agents. Clarity is needed around this scheme and I hope we can get clarity around the packages mentioned.

The merchant service providers have been in correspondence with the Department of Transport. I have seen an email from the Department of Transport to a representative of AIB Merchant Services. It is fair to say that the merchant service providers have been asked in the context of the matter we are discussing to bring clarity and they have not brought clarity. Has the commission engaged with the merchant service providers at any level?

Ms Cathy Mannion

Whenever they contact us to talk to us about any part of the scheme, we have an open door and we meet them and talk to them. We give them what clarity we can about how the scheme operates, what we cover and what the process is and information about the definition of the different parts of packages.

Given the legislation and the robust bonding we have in place, the merchant service providers are being unreasonable. Does Ms Mannion agree with that?

Ms Cathy Mannion

I am sorry to say I do not have a view on that. I would say it is not within our scope of work unless it is part of the commercial arrangements between the providers and the companies.

It is not within the scope of work of the commission. What is the risk to the merchant service providers? On a scale of one to ten, with ten being high-risk and one being low-risk, where would the commissioner put the risk? Will Ms Mannion answer that?

Ms Cathy Mannion

I cannot because I do not know the details of what is being requested by the service providers.

Where should the committee take this matter next? No matter who we are, for a merchant service provider to decide that 30% or another percentage of the total value of future bookings is the risk is not in line with CAR bonding levels relative to turnover. That level has broadly worked out for the past 30 years, with a couple of exceptions. Let us take the 30% figure or the €1.5 million being asked of a travel agent. Given that the agents have had no trading in the past 18 months and that we have a high bonding indemnity here, surely that is unfair.

Ms Cathy Mannion

I do not have a view on that. All I can say is that this is the scheme we operate. We encourage the customer to come to us first to deal with claims.

What is the legislation under which this bond is in place and under which the Commission for Aviation Regulation operates? Which Department? What legislation does the commission operate under to look for bonds from the travel agents and tour operators? What is that legislation?

Ms Cathy Mannion

It is the 1982 Act.

Mr. David Hodnett

The full title is the Transport (Tour Operators and Travel Agents) Act 1982.

Which Department?

Mr. David Hodnett

It is under the Department of Transport.

The statutory instruments have moved to 120 days. Again, this gives the merchant service providers further security in the context of our debate today. Let us consider the behaviour of the merchant service providers. On 4 May, the Department of Transport wrote to AIB Merchant Services. The Department said the Minister had received representations from licensed travel industry operators about significant changes to terms being applied by merchant service providers arising apparently from a reappraisal of the risk profile. Has the commission been made aware of any of that?

Ms Cathy Mannion

We have heard this from the travel trade representatives that have spoken to committee members.

Given the number of supports that the Government has given and put in, surely there is another route the committee can take in respect of merchant service providers. Deputy O'Rourke made reference to a proposal. I would put an amendment to it to invite in the merchant service providers. It is important that we give support to the travel industry. It is important that we support the travel agents who have not done anything wrong. They are being asked for outrageous amounts of money. I believe there is a possibility that the merchant service providers are confusing the UK with Ireland.

Ms Cathy Mannion

All I can do is repeat that whenever we speak to them, we are clear on the process that we run. The consumer comes to us first before going the chargeback routes.

Our legislation is clear that all merchant service providers refer all chargeback claims to CAR in the event of financial collapse. Is that not correct?

Ms Cathy Mannion

It is in the first instance. My understanding is they do not deal with the claim until they get the letter from the customer through us to say that it is not included in the arrangements.

Is it not correct that the merchant service providers are better protected by the regulator and consumer legislation in Ireland?

Ms Cathy Mannion

I do not know the detail of the legislation in the UK.

My thanks to the commissioners for being here this morning.

Has CAR sought legal opinion? The commissioners have travel agents and tour operators coming to them with this issue. Has CAR sought legal opinion on the rules under which the merchant providers or banking providers operate in Ireland? Does the framework enable CAR to say that as long as travel agents and tour operators comply with the bonding requirement as set out under Irish law, CAR can instruct them not to look for a higher bond level? Has CAR sought legal opinion on that?

Ms Cathy Mannion

We have not sought specific legal opinion on that but that does not lie within our legal remit. As I said before, that is the commercial arrangement between the service provider and the agent.

Under national legislation from the Department of Transport, the commission is dealing with travel agents that are legally registered in Ireland and operating here.

Ms Cathy Mannion

Yes, that is the scheme we operate.

I respectfully suggest that as part of our overall review of this, the commission would look to get legal opinion on whether its remit extends in that area. There is a lacuna here. The practical implication is that it may put travel agents and tour operators out of business in Ireland.

Many jobs are involved in the tourism sector, so we ask the commission to examine that area. Beyond what we are going to do as a committee, there is a need for that lacuna in the law to be examined.

I thank our guests. Ms Mannion has covered some of what I was going to ask. The commission has engaged with the merchant service providers and told them exactly what is going on. They are not confused about how the commission operates, the extent of their risk or the process they have to follow. Is that fair to say?

Ms Cathy Mannion

Yes, we are very clear on what our process is.

In those circumstances, it would not be wild to state that demanding up to 30% of projected turnover in a bond is absolutely unfair and uncalled for. I agree with the Chairman that there is a lacuna here. There is a failure to regulate or control this. We should invite in the merchant service providers but we probably need to examine where regulation is necessary. We all failed when we were considering the Air Navigation and Transport Bill 2020, which will change the nature of how CAR is going to operate. The regulatory parts, in any event, are going to become part of the IAA.

Ms Mannion has made her case in regard to that. We have put on the table that the merchant service providers are being utterly unfair and that we need to find a means of dealing with that and asking them the direct questions. What is the timeline, as Ms Mannion sees it, and what changes does she foresee in regard to aviation regulation as this new legislation is put into operation? What is her view on it? Beyond that, is there scope for new regulation that could deal with this?

Ms Cathy Mannion

The regulatory forum is a great opportunity to bring best practice into the Irish market, so I am really looking forward to our merger with the safety regulation division of the IAA. It is always best to be part of a larger strand or organisation. In short, the sooner, the better. I hope it will all be in place by September or October of this year, if we get through all the necessary processes.

Mr. Hodnett might wish to comment.

Mr. David Hodnett

I have nothing to add.

I appreciate that. Obviously, all legislation will have weaknesses that need to be examined, not least from a point of view of best practice regulation. Sometimes it is only through interaction with all the stakeholders and by putting something into operation that we can see those weaknesses. There is a definite difficulty for travel agents and they are being dealt with utterly unfairly. There is a failure, too, at State level. I accept that Ms Mannion cannot comment at length in respect of that but we as a committee need to deal with it.

I am happy enough to return to the other members whatever time remains because I know we will be under time pressure.

I understand that in her heart of hearts, Ms Mannion would probably agree with much of what we have to say, but that given her role, she has to be above politics and above committing to positions insofar as travel agents are concerned. I accept that she will not able to agree with what I have to say but I want to use a little of my time to make a brief statement. As a sector, travel agents have been ravaged. They pay a bond fee to the Commission for the Aviation Regulation, at 4% of their annual turnover, as a safety net to ensure that if somebody goes totally insolvent, or if there are issues with air fare refunds, there will be some clawback and something there to protect them.

What I have been alarmed by over recent months is that these merchant service providers are on the wings. Depending on how one views them, they are either an asset to protect the consumer, which they are, given that a person can book by card and there is an additional safety net there, or a vulture to many in the sector because, in some instances, they demand cash security deposits as high as 30% of projected turnover. In one case in Ireland, they demanded a cash security deposit of €1.5 million, which was absolutely ludicrous and would be crippling for businesses that are trying to function to some degree of normality and have fallen well short of that over the past 15 months. They are striving to recover, but that will be impossible when they are being charged more than seven times what the commission requires them to hold as a bond. The merchant service providers are hanging around asking for seven times that. I accept that Ms Mannion cannot comment on this and I have heard what she said in response to other members, but I just wanted to make that point.

Ms Mannion sat on the aviation recovery task force last year. One aspect of its report related specifically to the commission's role and I want to home in on it. Recommendation No. 5, on Dublin Airport, states:

The regulatory regime as overseen by the Commission for Aviation Regulation (CAR) should continue to apply to Dublin Airport, with a planned Interim Review of the current price-cap determination to be held in the coming months. Airlines should continue to pay all airport and air navigation charges relating to Dublin. The Government should provide a rebate directly to the airlines of all Dublin Airport charges and air navigation charges as paid by the airlines. This would represent State Aid, and it would have to be notified to the European Commission for approval in accordance with State Aid Rules.

People have bemoaned the fact that recommendations from the aviation task force have not been implemented. Again, I do not expect Ms Mannion to comment on that, given that the task force met as a broad entity and we are not individualising this. Nevertheless, one issue I have seen in the report is that it was intended for the continuance of the commission's regulatory functions at Dublin Airport, so it still has all of this scope.

As we approach the end of June and look to 19 July as a date from which international air travel will resume, and as we look to the sector bouncing back, is there anything Ms Mannion can say to people who are tuned in and who work in the aviation sector, such as travel agents and others who are concerned about where the sector in general is going, in regard to how pricing charges and the regulatory framework that is in place can be used in a positive discriminatory way to ensure that air travel into and out of Ireland will be shared better with the regions, rather than funnelling everything through our national airport? Dublin Airport is important - do not get me wrong - but it is equally important to have economic recovery in the regions and air travel to them. Is there anything in the current regulatory framework that could be used as a positive discrimination tool?

Ms Cathy Mannion

Our remit is to set the charge for Dublin Airport. As the Deputy said, we are going through a process of reviewing that. We had a determination in 2019 but its underlying assumptions became invalid when Covid emerged because the airport's passenger numbers dropped by up to 90% due to the devastating effect it has had. Since then, there have been two changes to prices for Dublin Airport for 2020 and 2021, effectively suggesting we keep them as they are. We are in the process of consulting all interested parties as to what we should do from 2022 onwards.

I accept that Ms Mannion is quite curtailed in regard to what she can say.

I thank our guests for their submissions, which have been informative. The questions I had intended to ask have been answered. Travel agents have appeared before the committee previously and I know many of them personally. They have had a desperate two years and are under considerable pressure to survive. At a time of crisis in the industry, excessive burdens are placed on travel agents. Compliance is a big issue. Anomalies have been highlighted at this meeting and we will need the merchant service providers to appear before the committee.

In 2020, the commission issued 181 licences, including 24 tour operator licences and 157 travel agent licences. Part of the commission's role is to monitor a variety of information including monthly and quarterly management accounts, and annual accounts. The impression we have is that when those 181 licences come up for renewal in October, there will be a significant reduction in the number applying because they are not able to survive the current crisis. From the commission's information on ongoing checks on travel agents and tour operators, does it feel that there will be 181 applications again in October or does it think that will be reduced significantly?

Ms Cathy Mannion

We completely agree with the Deputy about the devastating impact on the travel sector. It has had a difficult time, which we fully appreciate. Against that background, much of the industry was relicensed last year, which seems positive. They battened down the hatches and managed costs as well as they could.

Regarding this year, we are finding that for the most part, businesses are on top of their costs. They are hanging in there, waiting for something to improve. For many of these companies, bookings in the summer and the months afterwards are of vital importance. Even in the latest round, many people were licensed, which is positive. It gives me a feeling that they are managing the situation as well as they can. I know it is difficult for them but for the most part, they are doing their best to hang in there and to wait for an uptick in sales.

Anything that was of interest to me has been asked. I concur with Deputy Lowry that we should have the merchant service providers before the committee. It might give us an opportunity to understand the rationale behind some of their actions. Maybe we can schedule that at an appropriate time.

I will conclude with a few questions. The bond that is paid is 4% of turnover for a travel agent and 10% for a tour operator. What turnover figure does the commission look at?

Ms Cathy Mannion

It is the forecast for the 12 months covered by the licence. It is what the business expects to sell in the following 12 months.

Is that a calendar year?

Ms Cathy Mannion

The April round would be from 1 April to 31 March in the following year. We are finding that the projected turnover is reduced for this year compared with last year. The bond potentially remains the same but the level of the bond has reduced.

Do they have to pay physical cash?

Ms Cathy Mannion

They have a choice. It can be a bank bond, insurance bond or cash bond.

Are they typically cash bonds or insurance bonds?

Ms Cathy Mannion

I do not have the breakdown, but I can get it for the Chairman if he would like it. Many are bank bonds. Off-hand, I cannot remember the specifics.

Am I correct in saying that the only person who has access to that bond is the customer? The merchant providers do not. Am I correct in that assumption?

Ms Cathy Mannion

If a company becomes insolvent, we access the bond in full.

If a payment had been made to the travel agent, which it put through for the customer, and the entity it was dealing with becomes insolvent and the provider has paid the money, is it purely the customer that can submit a claim to the commission?

Ms Cathy Mannion

Yes. We encourage customers to make a claim to us. As soon as the company becomes insolvent, we put up notes on our website and we try to get as much information as possible to consumers. On occasion, we have got people in the company to help us to contact all the consumers. It works quite well in some cases where we actually get the company to work with us. Generally, it wants to work with us to look after its customers and make sure they get their money back.

The merchant providers have little, if any, contact with the commission on a financial level.

Ms Cathy Mannion

They have no contact with us apart from the fact that if insolvency occurs, we let them know because it is important that they know. If they communicate to consumers that their claim has been rejected in whole or in part by our scheme, they can take that to their bank.

This is slightly unrelated. I note that the Commission for Aviation Regulation is responsible for the scheduling, co-ordination and allocation of slots at Irish airports. How does that work? I assume that has nothing to do with the allocation of slots outside this jurisdiction.

Ms Cathy Mannion

No. We have responsibility for the slots at Dublin Airport because it is a constrained airport.

Is that the only airport? It does not arise in respect of Cork Airport or Shannon Airport.

Ms Cathy Mannion

They are not constrained airports so that level of regulation is not required.

What does "constrained" mean?

Ms Cathy Mannion

It means that many airlines want to use the airport and it needs to be co-ordinated to make sure it is used as effectively as possible.

Might I suggest that if more passengers were transferred to Shannon Airport and Cork Airport, there might not be the serious, continual congestion in Dublin Airport?

I will bring Senator Buttimer back in. As it stands, it is clear from all members that there is a lacuna. We need to invite the merchant providers in. I suggest that we write to the Department of Transport. The legislation is coming from Mr. Hodnett. It is Department of Transport legislation. What is its view on this issue? We might also write to the Central Bank about the financial regulation of providers. The more immediate issue is that we have a sense of urgency about getting merchant providers into the committee so that we have an overall view. The travel agent and tour operator sector is important. It has come through a difficult time. This measure that the merchant providers are looking at is placing an impossible burden on the sector. Deputy Lowry asked how many will renew their licences. I suggest that if this measure continues, far fewer will renew it. We need to cover that.

I was going to redouble on the request to bring in the merchant providers. As a committee, we should look at the potential in the Air Navigation and Transport Bill, when it comes to the Seanad, to try to address that lacuna. I thank Ms Mannion and Mr. Hodnett. It is important that we do not let this matter rest today.

When we write to the Department of Transport, we will address the Air Navigation and Transport Bill too.

I thank the Chairman.

I thank Senator Buttimer. I thank Ms Mannion and Mr. Hodnett for attending today's meeting and engaging with the committee. We will come back to this matter. We ask Ms Mannion, for the sake of completeness, to seek legal opinion to be certain about the legislation on the Commission for Aviation Regulation and merchant providers. She might let us know the outcome of that.

Sitting suspended at 1.29 p.m. and resumed at 1.38 p.m.