Transport (Tour Operators and Travel Agents) (No. 2) Bill, 1981: Second Stage.

Question proposed: "That the Bill be now read a Second Time."

Minister of State at the Department of Posts and Telegraphs (Mr. P. Harte)

The basic purpose of this Bill is to provide in law for measures to govern and regulate the operation of the Irish travel industry and to protect the interests of the travelling public. As Senators will note, the measure before the House is an enabling Bill, which when enacted, will enable the Minister for Transport to introduce the protective measures provided for by way of order or regulation.

The House will be well aware of some of the difficulties experienced by customers of the travel trade in the past couple of years. The question of the regulation of the travel trade in the interests of the travelling public has been an ongoing issue for some years now. The ideal situation would be one where governmental regulation could be avoided. With that end in mind successive Ministers for Transport have, in recent years, urged the trade to aim at a high degree of self-regulation in the interests of both the trade and the public. The trade, through the medium of the Irish Travel Agents' Association, did establish a fund which was used in the case of the failure of two relatively small companies and was also drawn on in the arrangements in which the ITAA participated in relation to Bray Travel clients who were abroad on holidays at the time of that collapse. However, the fund never reached a level sufficient to deal with a major collapse in the trade such as occurred in December 1980 in the case of Bray Travel. I acknowledge that, particularly in the wake of the Bray Travel collapse, the trade took upon itself in a more serious way to protect its customers by voluntary bonding arrangements and so on. Nevertheless, events have demonstrated that a need exists for Government-sponsored arrangements based on legislation to protect the public.

There were detailed consultations with the travel trade in the preparation of this measure. The input made by the trade was of great assistance and the Minister for Transport has asked me to take this opportunity to express his thanks for the encouragement and assistance received from the trade during the consultations.

The Bill before the House is a broad enabling measure that will provide the framework within which the travel trade can be regulated and the public protected. Senators will note that the Bill embraces all forms of transport and applies to both tour operators and travel agents. It would be the intention to proceed on a gradual basis. This may involve the application initially of the measures proposed to travel by air which is by far the medium of transport most used by package holidaymakers. Similarly the Bill gives the Minister for Transport scope to apply the measures proposed to tour operators at first and to travel agents later on. This may be necessary from an administrative and practical viewpoint in order to provide protection as quickly as possible for as large an element of the total market as possible.

The Irish travel trade consists of tour operators who negotiate, organise tours, arrange travel, book hotels, publish brochures and so on and travel agents who are the retail outlets for the sale of holiday packages, airline tickets, sea voyages and so on on behalf of tour organisers and transport carriers. At present there are about 30 tour operators in Ireland advertising to more than 100 destinations. There are, in addition about 200 travel agents in the country, many of whom, although primarily concerned with the retail of packages on behalf of various tour operators, organise weekend tours to London, Amsterdam, and so on. The majority of tour operators— travel agents are members of the Irish Travel Agents' Association.

The person buying a holiday is in the unique position of paying in full and in advance for a very perishable product available outside the jurisdiction almost entirely on the basis of descriptions of the product contained in a holiday brochure. The vast majority of Irish tour operators and travel agents are responsible individuals. However, there is at present no ban on entry to the trade and no criteria or qualifications to be met by new entrants. At present a person can rent a basement flat or shopfront, set himself up and advertise as a tour operator or travel agent and proceed to accept large sums of money over the counter for a service that may or may not materialise depending on a whole range of factors. The Irish Travel Agents' Association have only limited means of enforcing consumer protection measures on their members and, of course, have no function or power whatever in relation to non-members or new entrants to the trade.

I am aware that some retailers, particularly smaller ones are concerned about the question of having to secure licences and provide bonds. The Minister for Transport is conscious of this and in that regard, has asked me to clarify the position. The Minister acknowledges that retailers, members of the ITAA, have a good track record. However, the question of new entrants to the trade or retailers who are not members of the ITAA is a matter which needs to be considered. The Bill is an enabling one and application of its provisions to retailers is a matter to be discussed and decided in due course. Consultation with the trade was an integral feature of the preparation of this Bill. Those consultations will be continued through the implementation process and the question of requiring retailers to procure licences and bonds can be considered at that time.

The collapses which have occurred have prompted the ITAA and individual operators to look closely at the degree of protection offered to their customers. As a result, the ITAA as a body and a number of tour operators individually secured bonds from insurance companies and banks which were widely advertised as offering safeguards to the public booking holidays on trust. Action along those lines, is, of course, to be commended; the pity is that it took a major collapse in the trade to spur the move. The bonding arrangements entered into voluntarily have been the subject of a study recently completed by Messers Craig Gardner, management consultants, on behalf of the Director of Consumer Affairs. The findings in that study, though necessarily tentative because of the nature of the exercise, pointed to some major shortcomings which I believe are or up to recently were fairly widespread in the trade. Chief among the shortcomings was the capital structure, with companies trading with a relatively low paid-up capital compared to the size of their turnover. A further indication of this inadequate capital backing can be found in the fact that only one of the companies surveyed owned their premises, with the remainder having their premises on lease. While this may be typical of service industries with little or no investment in fixed assets, the under-capitalisation which the survey revealed coupled with the absence of reserves or other readily liquifiable resources suggests a heavy reliance in the trade on credit and cash flow with all the dangers that such a situation holds for the consumer when things go wrong for an operator.

In the area of bonding arrangements, the consultants found that generally tour operators who are members of the Irish Travel Agents' Association were bonded individually to the extent of 5 per cent of turnover, backed up by a reserve fund of £50,000 and a group bond of £500,000 for the summer 1981 season. These arrangements are, of course, voluntary, and the consultants pointed out that it was very difficult for any trade association to regulate its members when all the regulations were voluntary. For these reasons the consultants concluded, among other things, that the only way to enforce the adequate bonding of tour operators was by means of legislation.

The basic elements envisaged in the present measures are: a bonding arrangemen for tour operators and travel agents for the protection of their customers; a back-up protection fund to be raised by contributions from tour operators on a basis to be determined by the Minister for Transport; a system of licensing to control entry to the trade.

The bonding arrangements, which would be inter-linked with the licensing system, would represent the first line of defence in the event of an operator or agent failing to meet his commitments and the protection fund would represent the reserve. Availability of an adequate bond would be an essential requirement before any operator or agent would be considered for a licence.

The Bill has a broad underlying philosophy. It seeks to prevent failures in the trade as well as to provide remedies where failures occur, to protect the consumer as well as to regulate the trade. Consumer protection is the major motive, but the licensing and bonding elements will have, as a major objective also, the imposition of certain rigours and disciplines designed to put the trade on a proper footing in time and in this way to seek to prevent failures. It is envisaged that the bonding requirement will lead to financial probes by underwriters who are expert at gauging risk, and tour operators who are seriously under-capitalised are likely to be faced with the choice of improving their financial position, paying a high premium or not securing a bond at all. In the same way it is envisaged that in vetting applications for licences the Minister for Transport will be able to call for details of financial resources, reports and balance sheets, and pay particular regard to the degree of capitalisation of applications and condition licences accordingly.

The three elements involved represent an intergrated package which draws on the best elements of protection in force in other European countries. A number of other possible options were considered by the Minister for Transport including the possibility of some form of insurance arrangements. However, such arrangements would not prevent the entry of undesirable elements into the trade and were accordingly discarded in favour of licensing and bonding arrangements of the type envisaged.

The Bill has been well received generally by the various interests concerned. The debate on the Committee Stage may reveal a need for some amendments, but these would be largely of a technical nature and would not affect the general thrust of the Bill.

In a statement issued on 22 September last, the Director of Consumer Affairs supported the proposals provided for in this Bill and indicated his belief that the measures involved offer the best hope of avoiding a repetition of the extensive losses which some consumers have suffered in recent times.

The travel trade itself has been among those most vocal in recent times in calling for legislation in this area, and I believe that the Bill is generally welcomed by the trade. I should remind the House that the present measure is an enabling one, and the House may be assured that the Minister for Transport will proceed with all possible speed to make the necessary orders and regulations to bring the relevant arrangements into operation. I can say now, however, that the practicalities involved in implementation and indeed the need for further consultations with the trade make it impossible to have all the protection arrangements involved operational for this winter season or possibly for the 1982 summer season. Indeed, even if the proposed measures could be brought into force overnight, it would take some time, for example, to build up the protection fund to a level that would be sufficient to deal with a major collapse. In these circumstances there is an obligation on the trade, in its own interest, both from a customer-relationship point of view and in establishing or maintaining credibility with banks and insurance companies, etc. to offer protection in the intervening period by maintaining or improving the existing bonding and other protection arrangements devised by the trade. The Director of Consumer Affairs in a recent comment on this suggested that a reasonable level of protection for the coming winter and indeed the 1982 summer season would be afforded by an individual bond for the duration of the season equivalent to 10 per cent of annual turnover, or a continuation of the association's scheme which involves a 5 per cent individual bond backed up by a group bond of £500,000 and a reserve fund.

The present measure is an important consumer protection measure and I am happy to recommend it to the House.

Mr. Fallon

At the outset I should like to say that I welcome the principle of this Bill. We all realise that package holidays and holidays generally are now very big business. We know the importance of holidays in the lives of many families. We know that housewives often go out to work with a view to having a good holiday for themselves in the sun or that they save very hard in the same way as they would save for life assurance or whatever in order to have a holiday. That is their right if that is what they want to do, but in the past few years the industry has continued to grow. Therefore the people who pay for their holidays should be entitled to be free of anxiety in regard to those holidays. Once they have booked the whole experience should be a pleasant one for them.

It is regrettable that we are not in some way referring to the fine facilities that we have for those who holiday at home, who go, for instance, to Kerry, Donegal, Wexford or wherever. It is a pity that so many people tend to leave our shores rather than to stay at home. All of us would be better off if this were not the situation. However, as the Bill here deals with the person who goes abroad, that is the question with which we must deal.

The collapse of tour operators in the past has worried many people. It has caused concern within the travel trade itself and confidence in the travel trade has weakened as a result of these collapses. People are being wary. Rather than paying their deposit six weeks or two months in advance, they are waiting until almost the last moment. This indicates to me that people are concerned and are wondering. In these circumstances the idea of a bond is to be welcomed.

The Bill itself is one that is causing the trade some confusion. The controversial feature of the Bill would be whether the ordinary travel agents should be bonded. The travel agents of Ireland have had a very good record down through the years. I know that there was a recent unfortunate situation of the collapse of one company in the Dublin area, but by and large they should be congratulated for having a very fine record. As we know if one purchases tickets to go abroad from any of the travel agents of Ireland the travel agent must pay for that ticket before the 15th of the following month. The airlines have a very real hold on the travel agent and it is, therefore, not logical to ask the travel agents for a bonding situation.

If the travel agent must produce a bond he cannot pass on the extra charge involved to the consumer. He must request from the consumers the actual price that appears on the airline ticket. As well as that and apart from the record of the travel agents, apart from the fact that they have a fund of their own — something like £80,000 — they have proved themselves and I would hope that the Minister would do as he mentions on page 2 of his address, that is, bond the tour operators first and look at the scene at a later stage in regard to the travel agents. There is no doubt that the tour operator has been the guilty one in this whole scene. There is a need for a bonding situation here, and we know that the tour operator can pass on to the consumer the price of whatever the bond would be. It can be passed on by way of surcharge or in some other way.

The whole problem of getting into the business must be made much harder. One can get into the business quite easily, and I would welcome any arrangement whereby this process would be made more difficult.

The question of advising the public that there is a bonding arrangement must be spelled out in a very real way. The public must be informed that from next year on or whenever this bond is there, the holiday purchased is secure and that when one leaves Ireland he will be sure of transport home. This is vital and must be spelled out in the strongest possible manner. The question of bonding is one for much discussion. There is the question of how it is to be introduced. I know, for example, from the auctioneer's point of view that a limited number of companies are operating bonds.

I hope that when this arrangement is being negotiated all of the insurance companies operating in Ireland will be requested to enter the field of bonding. Obviously the more companies that are engaged in this business the better will be the rates. This happens in relation to car insurance or any other form of insurance. The more demand the better the rate will be. It might be preferable if it were done through an association rather than on an individual basis because in that way you are putting the onus on the organisation to say to their members, "you produce a bond; it is up to you to give us audited accounts." It is no harm to mention that one of the groups that collapsed had no available audited accounts for 1975 to 1980. The role of the accountants in this whole exercise and of auditors generally must be important, and anybody engaged in the bonding business if they are to receive bonds must receive them on the advice or on the guarantee of the accountant or of the auditor of the firm concerned.

The Minister, in his address, says that at Committee Stage amendments may be necessary. There may well be amendments. Primarily what I would say to the Minister at this stage is to consider the postponement of the question of the retail agent having his bond and also the question of a full investigation into who are likely to take bonds, where the best rate possible can be, because in that way the best deal possible can be got for the tour operators and then eventually for the consumer.

I can recall reading some time back that there was a Private Members' Bill which suggested that this might be a retrospective situation, and I wonder if this is envisaged in respect of this Bill. I would hope so because it is important that the confidence of the trade generally be retained. Basically, I would agree with the principle of the Bill. This particular bonding situation is long overdue and will be welcomed both by the consumer and by the people in the trade generally.

Mrs. Bolger

It gives me great pleasure to welcome the Minister to our House and to thank him very much for his extremely interesting address to us on this very important Bill. It is regrettable that the people of Ireland have had to wait so long for this Bill, but I understand that the Department have been faced with enormous difficulties in drafting it, not least of these being constitutional problems. I should like to congratulate the Minister and his Department for expediting this Bill in his short time in office. When operational it will prevent the sort of fears, frustrations and distress that travellers have experienced in the past. Irish holidaymakers will once again be able to look forward with confidence to their holidays.

I agree with Senator Fallon that we should be talking more about holidays at home, in the sunny south east, perhaps. In order to understand the background to this Bill it is necessary to recap a little on the history of the travel trade in Ireland and to identify some of the major crises in the business which precipitated the need for this legislation. The origin of travel agents goes back to the time of the Famine when there was enormous emigration and when cheap fares were organised for our unfortunate emigrants. Then the aeroplane revolutionised travel, which subsequently brought many problems and indeed produced an urgent need for some control in the business. The airlines themselves set up their own association — the International Air Transport Association — and they brought in regulations to ensure safety standards, the reliability financially and professionally of retail agents and the economic viability of the airlines.

Many countries also set up their own travel agency associations with their own regulations to govern the activities of their members particularly pertaining to their own countries. We sometimes underestimate the multiple and complex problems that travel agents have and the difficulties they have in carrying out their job professionally. I can see that this enabling Bill will help them to improve in this situation. They have to keep informed and up-to-date on constant changes in many areas of their business, currency changes, strikes, recessions, disturbances, fuel variations and costs. It is really very difficult for them to keep completely up-to-date with everything and to allow for all eventualities in the financing of their packages.

However, in 1970 the Irish Travel Agents' Association was founded in Kilkenny to create and maintain standards among its members for the betterment of the consumer and the industry. This association incorporated travel agents and tour operators under one body. Despite its professionalism the ITAA always accepted that there was an economic risk in this industry. In 1972 a rescue fund was set up to repatriate the Irish stranded abroad because of the collapse of any tour operator. Indeed, this worked most effectively until the major collapse of Bray Travel in December, when around 1,500 people lost their money and, of course, it was beyond the capability of the fund to cope with this.

The ITAA tried recently to get their members individually bonded, and indeed they are to be congratulated for this. This is a voluntary effort. They have also asked them to make an overall contribution to a joint bond, but since the ITAA have no statutory powers and members were not obliged to join, the effectiveness of these regulations was relatively minor. However, I hope these schemes will be continued until the Government legislation is operational to protect the consumer over the coming few months. I think that consumers are well advised on booking their holiday to investigate that such cover is held by the said travel agent or tour operator.

At this stage I would like to pay a personal tribute to the responsible attitude taken by the ITAA. It has shown over the years great leadership and foresight and has helped in no small way in the drafting of this legislation in order to stabilise the industry and to allay the fears of travellers. Perhaps at this stage I could quote from the recommendations of the Council of the Organisation for Economic Co-operation and Development which was adopted on 30 October 1979. Paragraphs 18 and 19 State:

In order to avoid the problems posed for tourists by failures of tour operators and retail agents of air package tours, high standards are required in the profession with particular regard to commercial probity, solvency and business conduct. Member countries should consider taking, where necessary, regulatory or other measures to ensure the observance of such standards.

The travel industry should ensure that, in the event that business failure occurs, sufficient funds are available through such measures as bonding, reserve funds or other schemes to minimise the loss of the tourist. Where the travel industry does not take adequate measures, statutory schemes to ensure compensation should be considered.

As a result of these recommendations and continuous fears indeed for our own travel trade, we have before us this Bill, which is an enabling measure to allow the Minister to have full consultation with the travel trade in drawing up the necessary orders and regulations to protect the overseas traveller and strengthen the trade in Ireland. It will affect approximately 30 tour operators, as the Minister has told us, and 200 travel agents.

The main elements of the Bill are a licensing scheme to control entry, and this is very important, an individual bonding scheme and a protection fund to back up the individual bonds. A licence under this Bill would not be granted without a bond, and this is an integral part of the legislation. If a collapse occurs in high season, the individual bond might not be sufficient to cover the enormous liabilities. In these circumstances they will be able to draw on this protection bond.

This enabling Bill will only allow the Minister to make regulations that will protect travellers in the future. There are, I believe, constitutional reasons which prevent retrospective compensation of victims out of finances that will accrue in the years ahead under the provisions of this Bill but I hope sincerely that the Minister will look again at this matter, which is a separate issue.

In the interests of the consumer and indeed of the travel trade, I hope that this Bill will get a speedy passage through the Seanad and the Dáil and that those people who are now saving and looking forward to their holidays in the coming year will know that no matter when they pay their deposit or the balance of their money they are guaranteed to get off on their holiday on the due day and that there will be no disappointment and no tears from anybody.

Professor Hillery

I should like to welcome the Minister to the House and to warmly congratulate him on his appointment as Minister of State.

I, too, join in the welcome for this Bill. It is consumer legislation designed to protect the travelling public. We have had too many examples of financial loss suffered by innocent citizens, causing disruption and disappointment in their holiday arrangements. It is a matter for regret that the travel industry itself has not voluntarily devised arrangements to adequately protect its customers. Because the industry has not so done we are, therefore, discussing this protective legislation today.

I recognise that this is the Second Stage of the Bill, but I would like to get the Minister's reactions to a few sections before we proceed to Committee Stage.

Section 6 relates to licences for tour operators and travel agents. It goes without saying that the Minister will be concerned with the financial standing and the general resources of the person who applies for a licence to ensure that he fully discharges all obligations. I wonder if the Minister agrees there is a need for distinct categories of licence to cater for different degrees of risk? Take, for example, the case of a tour operator who buys aircraft seats on a charter basis from an airline which does not, of necessity, have to be a member of the International Air Transport Association and may even be privately owned and of limited liability. To this type of charter arrangement a bulk contract for hotel accommodation is added. Both elements clearly involve very large financial commitments. This is a very high risk situation and I wonder if it is deserving of a separate category of licence?

In contrast to this, there is a low risk situation which, in turn, may be deserving of a separate category of licence, for example, take the case of a travel agent who operates tours on scheduled airline services. This takes place on an ad hoc basis in response to requests from social clubs, industrial organisations and so on. The travel agent puts together specialised tours of an educational, social or sporting nature and these are carried out on the normal scheduled services of an airline plus a standard hotel booking and, where necessary, transfer coaches. Such tours are largely prepaid, leaving only small adjustments of balances to finalise the matter. Therefore, the risk element is considerably lower compared to the first situation which I described.

The third and final category of licence to which I want to refer is a mixture of the two foregoing types. This applies in the main to larger travel organisations having both wholesale and retail operations who sometimes operate a regular series of tours which are based on "part-charter", that is, a contracted charter of specified numbers of seats on a scheduled airline service, allied to a bulk contract for hotel accommodation. The risk element in this case is in the hotel contract. I would like to get the Minister's reactions to the idea of having three distinct categories of licence to meet these varying degrees of risk.

Section 16 refers to the Travellers' Protection Fund as being a result of tour operator contributions. Section 18 speaks of disbursements from the fund being used to compensate victims of failures by tour operators or travel agents. These are two totally distinct and divorced business categories within the overall travel industry. The situation could arise where tour operators' moneys were being used to compensate the victim of a retail agent's carelessness.

In order to restrain excessive use of the protection fund I urge that it should be mandatory that customers take out insurance in respect of all package tour bookings. It takes only £8 to cover up to a 17-day trip. With regard to building up the fund itself, I offer the suggestion that it could be financed from a levy of 2 per cent to 3 per cent applied to the invoices of package tour clients. If this is not the arrangement the operator, should he receive a departmental request for a large contribution to the establishment of the fund, could well be forced to increase his overdraft by that amount involving high interest payments. Therefore, he might be forced to add on these additional costs incurred in contributing to the fund to his tour prices.

My final point relates to section 17 (2). The administration costs of the fund should be limited to the interest-earning capacity of the invested fund. Otherwise it could happen that the capital sum will be depleted to the detriment of the victims of any collapse.

Mr. Ferris

I should like to join with previous speakers in welcoming to this house the Minister of State and to wish him well in his new post. We are pleased that he is with us today initiating some enabling legislation that has been welcomed by everybody in this country, by the tourist trade, travel trade and the travelling public. It has taken some time to come before us but I understand there have been some problems in trying to get the legislation framed and the headings correct so that it will be constitutional and not too restrictive. We are pleased that this House has been honoured by initiating the legislation here and we thank the Minister for marking his confidence in this House.

The Minister stated that difficulties are being experienced by customers in this industry. That is probably the understatement of the year. There has been a major collapse in this industry by members of the association which has been running the travel business for some time. It has put tremendous financial burdens on people and has created tremendous trauma to families abroad. They have been marooned in other countries simply because no legislation existed in the past which would protect them from such situations. It is high time that somebody with responsibility in this industry has taken the matter a step forward.

We look forward to a greater degree of tourism to Ireland. Our tourist board and Aer Rianta have set up a programme for next year to try to ensure that a large number of people travel to Ireland. This Bill deals with the people who want to travel abroad on holidays. If people wish to do so, because of their occupation or the lack of sunshine in this country, or for any other reason we should ensure that legislation exists to protect them as consumers, which they are entitled to in a democratic society.

The Minister has complimented, and quite rightly, the Irish Travel Agents' Association on their contribution not alone to the travelling public during the years but also on their input into discussions that have taken place between the travel agents and the Minister and his advisers in trying to prepare legislation to meet the case that has arisen and which will be fair to all the people who have taken it upon themselves to set up this type of industry.

Senator Bolger remarked on how the industry started. Travel agents throughout the country play a very special role in the life of the community particularly in the rural areas, where they are the first contact when one needs to travel to England or closer destinations or even to exotic places such as Amsterdam. Travel agents arrange everything for people: for old age pensioners who go to England to visit relatives, they arrange free travel vouchers and also the travel ticket at the other side. They fill a tremendous void and help people in rural areas to arrange their means of transportation. They do their best to ensure that visits abroad are happy occasions.

Travel agents are a very important section of our community and they have been doing very worth while work during the years. It was rather unfortunate that they ran into trouble. This happened particularly in the area of tour operators as opposed to tourist trade travel agents in towns and cities in rural Ireland. In every second street in Dublin there seem to be travel agents trying to lure us into spending our money elsewhere instead of staying at home in Ireland. If the trade packaged transportation and tours within Ireland there would be better value for the money spent by people who like to travel.

The Minister has complimented the Irish Travel Agents' Association for their contribution to the discussions leading up to this measure. That association and the public were anxious that legislation would be initiated in this whole area. It is a fact, though, that the association members were the people who ran into difficulties. In the past arrangements to protect the consumer seem to have been a little haphazard. We have to question whether the terms of entry set up by the ITAA were for the protection of themselves as an association and for their existing members or for the protection of the travelling public. The most recent financial collapse of some of their members shows that the requirements they had written in to protect the travelling public were not as strict as the requirements for the protection of their own association. I compliment the Minister for initiating this very necessary legislation.

The Minister also indicated that he intends to apply the terms of this Bill to tour operators and travel agents. That is a most welcome part of the Bill. Professor Hillery said that two types of licences may be required. I advocate that as speedily as possible the Minister would extend the terms of this legislation to both sections. The Minister said in his opening remarks that he intends to apply it to tour operators initially and that he would then phase it in to apply to travel agents. I am concerned that there may be a big delay in this. The legislation should extend across the board and then the consumers in rural areas and in urban areas will be assured that there is protection for them. I ask the Minister to extend the terms of this Bill without delay to take in all facets of the industry.

The ITAA have only a limited means of enforcing consumer protection rights. The Minister, in his speech says that the ITAA have set up and bonded individual members to the extent of 5 per cent of their turnover backed up by this reserve fund of £50,000 and a group bond of £500,000 for the summer season. It was a gesture on their part that something needed to be done and as a voluntary organisation we must welcome that, but their powers of enforcement of this bonding or funding is so limited that it is imperative that some legal process be written into this trade to ensure that all sections of the travelling public will feel safer.

In your speech you say that there is at present no ban on——

An Cathaoirleach

The Chair would like to point out that the speaker should address his remarks to the Chair.

Mr. Ferris

I beg your pardon. The Minister said that there is no ban on entry to the trade and no criteria or qualifications to be met by new entrants. I am aware that this has not been the case because of the difficulty experienced by anybody legitimately trying to get into this business in all good faith, with proven financial and commercial ability. Some of the terms of the existing organisation have been fairly restrictive and have caused people to be almost unofficially involved in this trade. I do not accept that it is as easy as the Minister has stated, that people can suddenly start up in a rented basement and go into business. It is not that easy to acquire package deals, to function with tour operators, to deal with Aer Lingus or anybody involved in the provision of facilities and people who are not members of the Irish Travel Agents' Association have found it quite difficult to do so.

The Minister has said that the question of new entrants to the trade or retailers who are not already members of this association is a matter that needs to be considered. In the interests of free trade and in the interests of free enterprise in a free society it is important that the Minister would apply his talents to this particular section of the trade in which it might be too restrictive for genuinely committed people in business to get into the business. I welcome the Minister's commitment to look at this.

I will deal with some of the sections in the Bill because in his reply the Minister might like to take up a few little matters that concern me. I know it is an enabling Bill but perhaps the Minister has some guidelines set down as to how he intends to proceed. Part II, section 6 (3) (a) states:

Without prejudice to the generality of subsection (2) of this section, the Minister shall refuse a licence under this Act to a person if he is not satisfied that—

the financial, business and organisational resources of such person and any financial arrangements made or to be made by him are adequate for discharging his actual and potential obligations in respect of the activities (if any) in which he is engaged or in which he proposes to engage if the licence is granted, or

This is not very specific. There are absolutely no figures given here. I am not sure if there are specific staffing requirements written in in this, if it is the intention of the Minister to require staff to be already experienced in the business of travel agency and arranging with tour operators, or what the financial and business and organisational resources of a person are. Do people have to be specially qualified with some business degree or some higher diploma in business studies? What level are we talking about in that subsection?

In part II section 13, where the bond is dealt with it is stated:

A tour operator or travel agent shall, before a licence is granted to him under this Act, furnish evidence acceptable to the Minister that the tour operator or travel agent, as the case may be, has entered into an arrangement satisfactory to the Minister for the protection of persons who have, during the period of the validity of the licence entered into, or who may enter into, contracts with him relating to overseas travel.

In this particular section it is obviously imperative that a bond is available, I would like if the Minister could confirm that it is the experience of the trade at the moment that bonds are available or that they will be available in the future. If there are insurance companies at the moment in this country prepared to set up a bond for the industry I presume it is a bonding like that used in the building industry where public bodies and local authorities, health boards, vocational committees insist on a qualified contractor who has been successful in having a contract awarded for public works must produce a bond to the satisfaction of the various public bodies. If that is the case we are aware that that type of bonding facility is available in the building industry. Are we aware that such a bonding is available to the travel agents in this country to protect the interests of Irish people who travel abroad? It is important that Irish companies would be given the opportunity to enter into this. I wonder what criteria the Minister intends to lay down for the setting up of this bond. Will it be based on the turnover of the travel agent or the tour operator? Will it be based on his total turnover or on a percentage of it? Will it be based, as Senator Hillery said, on the invoice values? In what way can we ensure that the travelling public will in fact be totally covered?

I have put down the few points about which I have been worried as matters that we can possibly deal with on Committee Stage. Perhaps the Minister already, in his discussions with the trade, has been able to ensure that bonds can be secured. I feel that if we pass legislation making it obligatory for certain requirements to be written in it could be constitutional that this requirement would be available on a reasonable basis so that people who are directly involved, people who are concerned in the business and, indeed, people who aspire to get into this business, would be assured that within the country if at all possible bonds are available.

It is a useful piece of legislation. I am very pleased that it has been initiated in the Seanad. I am sure that it will have a very speedy passage through this House. The travelling public have looked forward to this. Our thanks go the the Minister for having done such an excellent job in the presentation of the Bill this morning.

Mr. D. Kiely

At the outset, I would like to welcome the Minister and to say that I welcome this new piece of legislation, which is a piece of consumer legislation brought before this House not at all too soon. However, I would like to say that it is only because of the collapses we have seen in the past few years that this legislation has been introduced into this House at all. Are we looking that far ahead of ourselves?

I feel very disappointed at our own airline for not pushing for some kind of security like this for the past decade or more. As a person who has been involved in this business I was involved with Aer Lingus some 20 years ago, in the opposite direction. Instead of sending people out of our country I was promoting people to come into our country. I got very little assistance from Aer Lingus. At that time they had bonds and bondages. Before you got into the travel trade in the United States you had to have at least $50,000 on deposit. You got monthly credit from the airline and you had to be bonded. Before a tour aircraft left the United States with the Irish flag on it they had to be paid two weeks in advance.

The whole situation seems to have reversed 20 years later. There are all types of new aircraft coming in, being bought and sold, re-sprayed and new names put on them. In the collapse of Miami Tours I feel Aer Lingus should have been the main people behind that tour. They are speaking about loss of revenue from their American traffic route. They say it will pick up in the next year or two but they have put no effort whatsoever into the industry or into the trade. They seem to be taking the people out of our country rather than bringing them in. I can see nothing wrong with Aer Lingus, who are a very reputable firm, getting more directly involved with these tours. At present the Minister does not exercise any direct statutory control over the operations of people involved in the organisation of sales of holidays abroad. This new legislation is quite welcome.

The existing Consumer Information Act, the Sale of Goods and Supply of Services Act, does not provide any guarantees against people being stranded abroad. This seems to be what we are getting at. The whole package here seems to be geared towards two types of people, the travel agent and the tour operator. The tour operators do not seem to be coming too well out of the discussions. I would definitely welcome these people being tackled firstly. However, I cannot for the life of me understand, if a package deal is made with a particular airline how they would allow that aircraft to leave the country without the bill being paid in advance, and with regard to the tour operator, how customers could enter into a hotel until the package is paid for in advance. All the tour operators are using the revenue for other needs. They are not paying up. I feel that an inspector from the Minister's Department should be introduced in this legislation not just to go in and check the records on a yearly basis but that he should have the authority to walk in and check any particular tour at any time and to ensure that this particular tour is paid for in advance. The Minister should have authority for one of the employees of his Department to walk in at any time, within four or five days of a tour going to Hong Kong, Amsterdam or any other place. This will have to be a very relevant part of the Minister's legislation.

At the moment the only power the Minister has is landing rights for aircraft in the country. It is very weak and this is why this legislation is very important. I am not at all happy, even though travel agents are being highly complimented here this morning by other speakers, at the way they have been operating their business over the last number of years. They tried to set up bonding systems themselves and they were so close when the larger ones just pulled the carpet from under them. Then the whole thing deflated. Legislation now has to be introduced to force these people into a situation to safeguard the consumer, which is only right.

Reference has been made to the type of operations these travel agents have with rented premises and so forth. I have nothing against rented premises. I feel many operators could run a very successful business. Most of them are running very successful businesses out of rented accommodation. I see nothing at all wrong with that. However, it is one thing to safeguard the consumers on accommodation and another thing to get them back to the country. Each tour should be specifically bonded rather than an across the board bond which would affect the smaller country type man, as other speakers referred to, where some small travel agents in small rural towns go to a lot of trouble to ensure that people's holidays are made as easy as possible. That man, maybe selling only 20 or 30 tickets a week, and who may not get involved in this large tour operating type business, should not be bonded to the extent of the man in Dublin, Cork or Limerick, the man who might be more involved in organising tours in the get rich type of operation. The tour operator to me seems to be the main man to tackle at the outset. I cannot see why the word of any fly by night individual, such as Miami Tours, would be taken if he had so much accommodation booked. This man should definitely be bonded immediately. I believe that he should be bonded on every tour that he intends to operate. Senators referred to the auctioneering type bond. I cannot see it working here. It is a completely different thing altogether. They might have a lot more money involved in one tour, and I ask the Minister to have a deeper look at that.

The licences were referred to by the Minister. He said that at present there is no ban on entry to the trade and no criteria or qualifications to be met by the new entrants. At the present time a person can rent a basement flat. There is absolutely nothing wrong in that. I can see a situation arising here that if there are too many restrictions on the new operator, he will be forced out of the business before he gets into it. The bigger ones will monopolise the business, increase their rates and put it on to the consumers, who will wind up the losers again. Any aspiring young tour operator, who is working within the framework of the operation, should be entitled to put his qualifications and experience before the Minister. This man might be able to come in and put forward a package far cheaper than the larger one because he would not have the overheads of the larger operator. He could be working out of rented accommodation. That will also have to be taken into account. At the moment in the auctioneering trade it is almost impossible to get a licence or a bond in that particular trade even though there was need years ago to introduce legislation to safeguard that industry. I would ask the Minister not to impose too many restrictions on the new man. Only for these new men things would be bad.

I will finish up by making a few more small points. The Minister, referring to the protection fund and how long will it take to implement the legislation also stated that he cannot see legislation being introduced by summer 1982. One of his reasons was because there was no protection fund. Naturally enough, he will not have a protection fund until he gets the whole thing in operation, I feel it should be done sooner than later. I also feel that if the Minister has no problems in the coming year he might be a little bit slow in introducing this at all, I feel, looking at the whole aspect of it, that more stringent regulations should be introduced. Most people getting into the business should put their money where their mouth is. I said at the outset of my remarks that Aer Lingus seem to have diverted from their thinking 20, 18 and 15 years ago when people had to pay for their aircraft three weeks in advance. I would like the Minister to look into all those aspects. I welcome the Bill.

Mr. Howard

I welcome the opportunity to come in on this Bill which I regard as quite an important measure. I want to join with the other Senators in extending our welcome to the Minister. It is the first occasion that I have spoken here during his attendance. I wish him well in what is indeed a very responsible and quite demanding position. I must say, having got up to make my contribution immediately after Senator Kiely, I was quite interested in a number of the points that he made. He indicated that 15 or 20 years ago it was necessary to have a bonding arrangement. A figure of $50,000 was mentioned. When hiring an aircraft it was necessary to pay for it three weeks in advance. If that were the situation 15 or 20 years ago, it is a pity the travel business did not develop and build on that basis, I cannot claim to have a very detailed knowledge of the situation but it would appear that we have drifted from what was a good basis to start off with at that particular time.

There is one other comment I would like to make on what Senator Kiely said. I understood him to say he regretted that it took the collapse of a major agency to bring about the introduction of this legislation. I find certain common ground with him on that. I want to put in the qualification that I do not think we can lay the blame for that situation at the door of the Minister of State or indeed the Minister for Transport. I want to suggest that once they were in a position to move on the situation they did so with all the means available to them. I do not think that there is any way we could lay the responsibility on the Minister of State or the Minister for Transport because of the failure to protect consumers in the travel situation.

It is also fair to say that even before the collapse of Bray Travel there were a few other smaller firms in the travel business who got into difficulties. The early warning signs were there. I agree that perhaps action should have been taken at an earlier stage. Apparently, because of the size of the firms involved, the effects were not as widespread and there were not as many people affected as were affected on the morning of the collapse of Bray Travel a year ago. There was delay in taking action. I indeed subscribe to a very great degree to the idea that perhaps the collapse of Bray Travel speeded things up to a certain extent.

There is an obligation on us, once we have got the opportunity to consider this measure, to start out from one very basic consideration, that is, to provide for the protection of the consumers' interests. Once we start off on that principle we are obliged to give the most comprehensive measure of protection that we can give for their interests. I believe the Bill we are now discussing is quite comprehensive.

I want to compliment the Minister on the Bill being as comprehensive as it is. It covers the two main components of the overseas holiday trade, the tour operator and the travel agent. I want to join with other Senators in saying that I, without question, accept that the vast majority of firms engaged in the travel business, tour operators or travel agents, are totally honest. They are totally dedicated to do a genuine and fair job in the trade they are in. Therefore, I do not want the remarks that I may follow with shortly to be interpreted in any way as reflecting on the honesty and integrity of the vast majority of the people who operate in the travel trade.

I welcome the measures in the Bill. I believe they will be generally welcomed by the people who are engaged in the travel business. If I might borrow again a phrase used by Senator Kiely when he referred to the "fly by night operators", the vast majority of the firms at the retail end of the tour operators' end of the travel business do not want the "fly by night operator" because the damage that firm, the one bad apple, does to their reputation and to their business is so enormous they do not want him to operate. I am satisfied that they will recognise that within the Bill we are now discussing are the methods and conditions by which we can ensure that the "fly by night" operator will not by stealth find his way into the travel business.

The reputation and business of many reputable firms who are engaged in the business could be put at risk by the action of one unscrupulous operator engaged in the business. If they are satisfied that we are providing through this Bill that measure of safeguard against the entry of that individual into the business I believe it will be welcomed very substantially by all elements of the travel trade. They know that it is very much to their advantage to keep the confidence of the consumer high in that industry. The higher the confidence of the consumer is in the integrity and the standing of the people engaged in the travel trade the better and more advantageous it is to their business.

The Bill will be recognised by them as something that will ensure that companies continue to remain high and perhaps even go higher in the confidence of the consumer and the travelling public. The Minister in the course of his speech said:

It is only when one reads that in cold print that one realises the risks that are taken and the risks that are involved. As a person who sometimes avails of that facility, the full implications of it never occurred to me until the Minister read out that description this morning. The purpose of this Bill is to eliminate the measure of risk there is obviously in booking and paying for a package holiday.

Senator Ferris in the course of his address spoke about Irish people who are continuously going abroad on holiday. The people we are seeking to protect in this unusual trade are our own people. They are men and women, boys and girls, as the case may be, who put aside week by week or month by month a few pounds from their pay packets to pay for a holiday where sunshine is guaranteed and where they have an opportunity to experience, perhaps for the first time, the lifestyles of other countries.

Senators Bolger and Ferris spoke about the fact that the number of Irish people who take holidays abroad has grown year by year. I understand that the number of people who took holidays abroad this year exceeded the number of visitors who came to enjoy the hospitality of this island. From an economic point of view that is a disturbing feature. I know there are a number of factors involved and people have tried to analyse the reasons for the continuing drop in the number of people who come to Ireland.

It is in the interest of the nation that we consider the situation seriously. There is an urgent need to reverse the trend. We should not attempt to reverse it by preventing people from going outside the country on holidays. That is their choice. We are a free people. The only way we can balance the situation is by encouraging more visitors from abroad to come and spend their holidays here. In addition I want to emphasise to our people — I am sure that holiday agencies are very conscious of this but it is no harm to emphasise it — that it is patriotic for them to holiday in Ireland. We should encourage our own people to spend their holidays in Ireland rather than try to prevent them going abroad.

I have often wondered what the reasons are which prompt people to go to different places. Amsterdam and other places have been mentioned. I believe that in our make-up we have inherited an ancestral trait of the wandering Celt. If it was not for that trait of theirs which prevented them from settling in some valley in Europe centuries ago, perhaps, we would not be discussing this issue here at all. We must recognise that as being a feature of the make-up of Irish people. There is a desire to sample the lifestyles and see the sights of other countries. The industry we are speaking about in this Bill will continue to enjoy a certain measure of expansion and because of that the risks will increase. There will be a greater need for what we are doing in the Bill.

A major aspect is the employment provided by the travel trade. It is a growing industry. As the Minister told us, there are 30 firms who operate as major tour operators and there are another 200 plus who operate as travel agents. There is no doubt that the number of people employed between these is quite substantial and is increasing. Therefore, we are talking about an important employment factor and a viable industrial development.

Senator Hillery in the course of his speech raised certain queries about licensing and the methods by which the Minister proposes to control or exercise authority over the functioning of the travel trade and its regulations. There are, as the Minister told us, three basic elements. There is the bonding arrangement, the back-up protection fund and the system of licensing. The picture that emerges from all this is a very simple one. Without a bond one will not get a licence. That is a simple and effective measure of control. The Minister said that the criteria by which licences will be issued has yet to be decided. Senator Fallon expressed the view that it would be good if more insurance companies were encouraged to become involved in the provision of bonding — if many of them are involved that should make the cost of bonding more competitive. That is a sentiment which I share.

No reputable travel agent or tour operator will object to a licensing system which will develop a growing and thriving industry. Senator Fallon also said that travel agents as distinct from tour operators are not happy to be involved in a licensing arrangement at present. That coincides with views expressed by certain travel agents. The impression I got from speaking to a few travel agents was that they were not convinced that there was a need to involve the licensing system at this stage. They felt that the licensing system should be confined initially to tour operators. They indicated that they had a bonding arrangement within their own association, the Irish Travel Agents' Association. They felt that this was adequate to cover whatever reservations the Minister might have. The weak spot in that case is that as matters now stand there is nothing to compel any travel agent to join the association or be covered by the bonding arrangements that they have arranged themselves.

If the purpose of the Bill is to provide protection for the consumer, we must provide full protection. We would not be providing full protection if we confined the licensing and bonding system solely to the tour operator. There is a retail element within the trade and if our first obligation is to the consumer and the travelling public, we have to provide total protection and involve all elements of the travel trade. I recognise that there will be a period of time between the passing of this Bill, which is really enabling legislation, and the making of regulations by the Minister. That time can be used by those in the travel trade to discuss with the Department satisfactory arrangements that may well incorporate the existing bonding system.

Travel agents should not be left out because the whole object of the exercise is to provide full protection. When one says that there is risk that people will feel one does not have confidence in those engaged in the retail end of the business, as far as I am concerned that is not the case. I have the utmost confidence in the vast majority of those involved in the retail end of the business. As somebody who will be voting for this legislation and whose objective is total consumer protection, I cannot take half measures. By excluding travel agents at this stage that is what I would be doing, going half way along the road of insuring that there is protection for the consumer in this situation.

As of now any person can set up as a travel agent. He can rent or lease a flat, basement, shopfront and engage in the business of booking holidays. He is not obliged to be a member of the travel agents' association and be covered by their bonding system. For that reason, it is necessary that there be total coverage. In the period between the passing of this enabling legislation and the making of the regulations there will be adequate time for the travel agents' association to see to what extent their bonding arrangements can meet with the requirements the Minister has in mind.

There is one aspect of the travel business that the Minister will be able to regulate and oversee. From time to time we hear of people who are not totally satisfied that what was sold to them was what they received. Sometimes it can be just an irritant but at other times it can be quite embarrassing and unjust. I should like to refer to customers who, because perhaps of availability of other accommodation in a holiday resort, do not purchase the entire holiday package from a tour operator but instead purchase seats. I understand they purchase a seat on a plane and pay to be taken to an airport.

There has been an understanding for some time between the Department and tour operators that in these circumstances where a holidaymaker purchases a seat as distinct from a full package holiday, the tour operator has accepted or recognised an obligation to provide transport, especially at night time flights, to that holidaymaker from the airport to the hotel on the operator's list which is nearest to the point the tourist is travelling to. On the return journey, the arrangement is also that the person who purchased the seat can avail of the operator's transport from the nearest hotel or the operator's list to the airport. In the vast majority of cases this arrangement works satisfactorily. I have had personal experience of this condition not being fulfilled by one operator. I shall not identify the firm concerned. I had experience on two occasions of this obligation by the operator not being fulfilled and on both occasions the same operator was involved. It almost led to my arrest by the Spanish police because I insisted on my rights. I was saved from that fate by the fact that I was a Member of the Oireachtas. The said company were subjecting a person immediately behind me, who was an industrialist from across the channel, providing employment in the north-east of Ireland, to precisely the same treatment. It was on my intercession that he got through.

The Minister should be anxious to exclude any element of harassment by any company in discouraging people from availing of seats without availing of the entire holiday package. It is an element that I find objectionable. We as guardians of travelling holidaymakers should bear this in mind. I am not raising this because of any personal grievance but simply to illustrate that it could happen to other people. It was indicated to me at the airport on the return journey that I did not have priority, that they fill the plane with their own passengers and if they could fit me in at that stage they would. Imagine the position of a holidaymaker who had booked out of a hotel and had to stay overnight with perhaps all his holiday money spent. I hope that when the regulations are being made this aspect will be looked at.

I should like to take up one point that Senator Hillery made in the course of his contribution. I did not understand why there should be different types of licences related to the different types of risks. If we start out on the basis that one does not get a licence without first having a bond, I wonder should it be a different type of bond for the initial step rather than a different type of licence. If we set out to provide protection which is recognised on all sides of the House as being necessary, then we must provide protection that is adequate. The system the Minister is talking about, that is, no licence without a bond at both the tour operator and retail end is as effective a method as we can get to provide regular protection which we all recognise is necessary. I welcome the Bill and fully support it.

Mr. Leonard

I congratulate the Minister of State, Deputy Harte, on his first visit to the Seanad in that capacity. We all agree on the necessity for this Bill. It is the bones of a Bill that was brought in, in the early part of this year. It is necessary to ensure that contractual arrangements made by tour operators and travel agents are honoured. It is important to ensure that as individuals, groups or a Government, if we enter into commitments they will be carried through. It is a pity that the State has to step in to ensure that commitments are adhered to.

Tour operators and travel agents have been in operation for a number of years. They had a very favourable climate in the late sixties in which to operate. It is a great pity that during that period they did not set up some kind of structure and so avoid the necessity for the State to step in to legislate in this area. The work of tour operators and travel agents is very important from national and local points of view. We have travel agents who provide a very efficient and good service. I know travel agents who have travelled many miles with plane tickets to facilitate people who were faced with emergencies, for example, accidents or death.

It is a great pity that we have to introduce legislation for commercial enterprises such as this. Admittedly, other countries had to legislate also but Germany, for example, have a fund from which they can bail out any failures.

Mention was made of the size of a bond. I hope that it will not inhibit or be detrimental to small operators. Mention has also been made of the percentages that will be required. It is regrettable that many of our people are holidaying out of Ireland and that there are not more tourists coming here. Our tourist industry was the third largest industry in the country and had terrific potential for the development of resources in the country such as amenities, entertainment and so on. There was a spin-off to service industries, garages, filling stations and so on. It is regrettable that so many people holiday abroad. It is affecting the balance of payments. A lot of money goes out of the country in that way.

I notice in an Aer Lingus news sheet which was sent out recently that Mr. Michael Delaney when speaking to the Irish Hotels Federation commented on poor trading conditions and spoke about more aggressive marketing. While Ireland's share of world tourism has declined over the past decade, Mr. Delaney questioned whether this serious setback could be attributed wholly to the violence and unrest prevailing in the country during that period. He said that it was an unmistakeable fact that price increases in Ireland in recent years had far outstripped those in Europe and the US. In all probability the industry generally has been hiding under the excuse of the unrest which we admit is there and is so regrettable. But that is not the whole story. The fact is that we are pricing ourselves out of the market. For various reasons our inflation rate is about 20 per cent, twice the amount of many other countries against which we are competing in the tourist field.

He outlined the main attractions of our country regarding scenery, tranquility, the relatively low level of pollution and uncrowded roads. He said that we should preserve and cherish these qualities for they will become more appreciated by potential visitors. I hope we will have the maximum number of tourists we can cater for. He said people were purchasing separately various elements of holidays such as travel, accommodation, car hire, cruising, fishing, entertainment and so on. In these circumstances, it is important to have the type of cover given in the Bill.

The Minister said that only one of the companies surveyed owned their own premises. The remaining companies lease their premises. It would be much better if companies owned their premises. They would be on a sounder footing. The fact is that many permises would be very expensive to purchase as most are in good vantage areas. The only option they have is to lease them. He mentioned also that the only means of transport covered was air transport. It is important that all the other aspects be covered. The Minister also stated that qualifications were not required. If this Bill helps to regularise many of the anomalies in the tourist business at present, it will be very welcome. A Private Member's Bill, the Travel Reserve Fund Bill, was before the Dáil last March, and the possibility of making a Bill retrospective was discussed then. We had a big gallery at that debate.

Mr. Magner

I also extend a welcome to the Minister of State, Deputy Harte. There will be a general welcome for this Bill. At one time foreign travel was confined to a very small sector of the Irish public, the wealthiest section of our people. The only foreign travel undertaken by the masses was either by oneway ticket to America in the hold of a passenger ship or as a worker on a ship. In the last decade or so we have seen an explosion in the travel trade, basically because of the package holidays and cheaper transportation costs. For many people this Bill has come too late. A number of people have lost substantial sums of money because the previous Government were very negligent in looking after the interests of the travelling public in this regard. The report from the Director of Consumer Affairs on the travel industry highlighted the fact that because of the explosion in travel among a wider section of the public people went into this business without experience, capital or assets of any sort and, they to use an old cliché, came in on a wing and a prayer. Yet the Government of the day allowed the old maxim, "Let the buyer beware" to operate when consumer legislation had made that phrase outdated to a large extent. We no longer say, "Let the buyer beware"; we say "Let the fellow who produces the goods and services beware or we will be on his house". This area has been neglected and people, mostly ordinary working people, suffered in the recent past, because they saved for a long time and put down their money with a company who dried up. Cases are in court now and I must be careful about what I say.

All travel organisations have a direct retrospective responsibility here. Perhaps the Minister would indicate, at a future stage in the Bill, if any plans are afoot to discuss with the ITAA the question of compensation for those people who were ripped off because some companies took money from them when the liquidator was almost on the doorstep.

Governments should foresee such situations. The Department of Labour some time age discussed an early warning system on strikes and so on. Having seen the growth of this industry and the massive amounts of moneys passing hands from the public to the tour operators, the Government should have asked the Director of Consumer Affairs to look at the situation and find out what the position was vis-á-vis those tour operators. Most of the tour operators had no assets apart from the people's money which they had taken on deposit. Most of them had no premises and such premises as they had were mostly small and of little value compared with the amount of money taken across the counter from customers. Section 8 (2) of the Bill states:

(a) the financial, business and organisational resources of the holder of the licence or any finance arrangements made by him are adequate for discharging his actual potential obligations...

Does this cover his entire operation? In many cases, apart from the aircraft, people are dumped on the other side, mostly in Spain, in accommodation which they never booked, in places to which they were never supposed to go, and their holiday has been completely ruined. Most of the small operators had no resources in terms of organisation. They were in many cases using part-time couriers who were employed by larger carriers and the customers of the small operator got minimum attention. If that area is covered then I am quite happy, but if not then a large gap is left. As was the case in Miami, many people were, through the goodness of the hotel owners, allowed to remain on until Aer Lingus sorted out the problems of flying them back home. The industry as a whole have a specific obligation to those members of the public who have thus lost substantial sums of money and they now recognise, because the Government are bringing in this legislation, this obligation that rests upon them. It rests also upon the Government because of lack of protective provision heretofore. I ask the Minister to ensure that these people will be recompensed in some way. The tourist industry is buoyant enough to fulfil that obligation.

Mrs. O'Rourke

I welcome this legislation and I welcome the Minister to the House. It is consumer legislation; we are all consumers and, therefore, it is up to us to give it a particular welcome. One important aspect of this Bill to which previous speakers have referred is with regard to the clear differences between the two types of persons involved in the tourist trade. I will call them the wholesaler and the retailer, the tour operator and the travel agent. To the public in general they are all tour operators or they are all travel agents and the clear difference is not accurately pointed out. It is unfair to couple the bonding and licensing system of the tour operator and the travel agent together at the one level. Senator Leonard has spoken of the community service given by the tour operaotrs in the small villages and towns of Ireland. In many cases they have a grocery shop or some other sort of business which they combine with the travel service and they give advice, help and guidance to many people calling to see them.

Over the years the travel agents of Ireland have creditably given great service to the public. It is unfair that they would be subject to the same costings as the bigger type tour operators. I ask the Minister to bear this point in mind. I suggest to him that the cost be relative to the amount of business done by that travel agent in the tour operator range. I welcome this measure because it gives protection to the consumer, and yet I feel a slight tinge of regret that we are seen to be actively helping to increase costs on our import business. We would much prefer that people would stay at home on holiday.

Senator Bolger said that he would prefer that they stay in Ireland and sample the delights of this country and spend their money here. A measure of the prosperity that Ireland has reached is that the people can save for their holidays to which they look forward, and in a country where the great lack is of sunshine naturally there is a yearning to get away. I would point out the record of service of the small travel agents and ask that they be looked at and be categorised in a special way rather than being coupled with the tour operators.

Dr. Whitaker

It is unfortunate that this Bill is necessary for the protection of the consumer. The form of the legislation is broadly appropriate to the needs of the situation. I shall refrain from mentioning the balance of payments considerations regarding tourism and confine my remarks to two of the principal parts of the Bill, Parts II and IV.

If I am misreading the provisions of Part II I am in good company this morning. As regards licences, what Part II envisages is that neither a tour operator nor a travel agent will be able in future to carry on business without a licence. The kind of licence, as other Senators have remarked, seems to be a uniform, standard licence not differentiating between tour operators and travel agents. Section 7, in referring to what the Minister may prescribe by regulation, seems to confirm this interpretation because it lays down the conditions that shall be complied with before a licence is granted. The only place in which there is any reference to the possibility of conditions or terms being varied by reference to the type of licensee is section 8. But that section applies only where the person already has a licence and is not complying with it or is in breach of it. Perhaps it is deliberate that there is this lack of flexibility and that this is one of the rigours the Minister spoke about in his opening statement.

I recall, however, that in relation to the licensing of banks, for example, it was useful to have some flexibility — to be able to prescribe as a condition of a licence in any individual case that certain standards or certain criteria should be observed within a limited space of time. The Minister said that one of the difficulties which tour operators and travel agents may experience is inadequacy of capital. He may like to consider whether the conditions of a licence might not be used to screw up an operator who was somewhat inadequate at the start to a condition of adequacy within a reasonable space of time. That was done in relation to banking institutions which were already in existence at the time the licensing provisions were introduced and where to require them to conform immediately to what were recognised to be proper standards for licensees for the future might have been oppressive.

I would like to support the point made by Senator Fallon in favour of its being made a condition of any licence granted that the licensee produce promptly and regularly audited accounts of his business.

As regards Part IV, which deals with the protection fund, I find myself a little bit out of sympathy with the idea, in this inflationary age, of building up any kind of substantial fund and making provision for investing it. The Minister referred in his opening statement to the time it would take to build up the protection fund to "a level that would be sufficient to deal with a major collapse." As Senator Hillery pointed out, only tour operators would be required to make contributions to the fund. If the contributions from that one sector are intended to build up a very sizeable fund such as would be needed to deal with a major collapse that would take quite a while, and I would question the necessity for proceeding in that way.

Section 19 says how the money of the fund is to be invested. In effect, it confines the investment to trust funds or funds in which the Post Office Savings Bank may be invested. It is apparent to everyone that investment of that kind in an inflationary age is going to erode rapidly with time. Would it not be a better procedure to levy, as, for example, general accident insurance companies have to do, enough money over a period of years to cover whatever may be the outgoings to meet cases of default and not contemplate building up a huge fund to be invested in what will be rapidly depreciating money? I suggest that point also to the Minister for consideration.

I was disappointed to hear the Minister say that the provisions of this Bill may not be operative even for the 1982 summer reason. I hope that more rapid progress than that will be made.

Finally, I join in the welcome to the Minister of State on his first visit to the House.

Mrs. McGuinness

I join other Senators in welcoming the Minister of State on his first visit to the House and in welcoming this Bill which clearly is necessary legislation, as we know only too well because of things that have happened in regard to travel agencies within the past year. I would join with the Minister in trying to regulate the situation.

I will not take up the time of the House in recalling what the situation has been. In the majority of cases people have successful holidays through Irish tour operators and we cannot blacken the entire tour operator industry because some of them have defaulted. The major weakness in the whole thing is highlighted in the speech of the Minister of State where he quotes the report given by Craig Gardner, Management Consultants, about the tour operation industry in which they highlighted with a number of tables and so on the fact that the capital structure of tour operators is really very small and weak in comparison with their turn-over and the amount of money they may have paid out at any particular time of the year.

This report and the comments of the Director of Consumer Affairs thereon which he published on 22 September 1981 highlight the fact that the thing varies greatly from one time of the year to another. The degree of risk that travel agents and tour operators take and the dangers caused to consumers thereby varies greatly from one time of the year to another. I apologise to the Minister for the fact that I was not present when he made his speech as I was detained elsewhere. I notice in the script of his speech that he mentions that the Irish Travel Agents' Association were bonded individually to the extent of 5 per cent, but he has not suggested what level of bonding he considers desirable under the present legislation. I suggest that 5 per cent probably is not enough. A level of 10 per cent is more likely to be a protection to the consumer, and this was urged on the Government by the Director of Consumer Affairs in the document published on 22 September 1981 to which I have referred. The director says that the question remains at the level of protection which consumers can expect and so on, and that a reasonable level of protection would be afforded by an individual bond valid for the entire season and for an amount equivalent to 10 per cent of the annual turn-over. I would be interested to hear what level the Minister is recommending or thinking of in the case of this bonding.

I will now refer briefly to a number of other matters within the Bill. There are a number of points that I would like to make on Committee Stage but if I mention some of them now the Minister might consider bringing in an amendment on Committee Stage. Section 2 gives the definition of a tour operator as a person other than a carrier who arranges tours and so on. In some cases airlines themselves act as tour operators. Aer Lingus, as far as I am aware, do not do this themselves but act through subsidiary companies. I think some foreign airlines act as tour operators. An airline is per se a carrier and we might look at that definition to see whether some tour operators might be excluded on the grounds that they are carriers.

Section 2 (3), regarding the loss or liability incurred by the customer, refers to the inability or failure of the tour operator or travel agent to meet his financial or contractual obligations in relation to the overseas travel contract. It is difficult to define the circumstances in which a consumer can claim under this sort of legislation, but clearly the idea of the Bill is to provide for the situation where the travel agents or tour operators cannot meet their Bills and so on as happened in the case of Bray Travel. It is not meant to include cases where the accommodation is not satisfactory in some way or another.

Section 13 (7) provides for a saver about this in that it does not enable one to recover damages in relation to the standard of accommodation or service provided.

The use of the word "contractual" in section 2(3) is somewhat wide because contractual obligations cover a very wide range of obligations by the tour operators which would be outside the range of their financial obligations under the Bill. I would ask the Minister to see if it would be possible to define in a positive rather than a negative way the circumstances under which a consumer may claim under this legislation rather than giving a very wide definition like "financial or contractual obligations" and then trying to take out some of the provisions as is done in section 13(7). This might be looked at a little further before Committee Stage.

Section 6 deals with the granting of licences. Of course I welcome this idea of licences. One great fault of the travel agency and tour operator business has been the fact that there has been no control over who sets up as a business. I am delighted that the Minister is trying to get power to make sure that the people who operate these businesses are proper persons to do so, but I wonder if the arrangements in section 6(3) (b) may not go so far in the direction of placing the onus on the applicant to satisfy the Minister and giving the Minister such wide powers to be dissatisfied, as it were, having regard to the:

...past activities of any director, secretary, shareholder, officer or servant of the body corporate,...

That goes very far indeed. There may be a danger that this section would be held to be unconstitutional because there is very little opportunity for the person to, as it were, put forward his own case on this. The Minister has to feel not satisfied, and that is it. There is little provision for natural justice, audi altrem partem, the hearing of the other side of the case and so on. Perhaps a look should be taken at this, although I am all in favour of the idea behind it. As far as Second Stage is concerned I will conclude my remarks with that because any of the other areas that I would wish to deal with are small points that could very well be raised section by section on Committee Stage.

I would conclude by congratulating the Minister and by echoing Senator Whitaker's hope that the legislation can be brought in as quickly as possible. If it cannot be brought in immediately as much pressure as possible should be brought to bear to ensure that adequate levels of bonding would be undertaken for this coming winter and summer seasons.

Debate adjourned.

The Seanad adjourned at 1 p.m. until 2.30 p.m. on Wednesday, 2 December 1981.

Seanad Éireann díospóireacht - Thursday, 26 Nov 1981

Transport (Tour Operators and Travel Agents) (No. 2) Bill, 1981: Second Stage.

Seanad Éireann díospóireacht -
Thursday, 26 Nov 1981