LOCH, Ms Liza-Jayne (LJ), Interim Head of Advocacy, Australian Federation of Travel Agents [by video link]

MANWARING, Mr Tom, Chair, Australian Federation of Travel Agents [by video link]

[11:47]

ACTING CHAIR: I now welcome representatives from the Australian Federation of Travel Agents via video conference. I congratulate you for your terrific advocacy on behalf of your members and industry. I know that Pat Conaghan and others in my party room raise your issues frequently, and you've done a terrific job of advocating for the very real and distressing challenges that have been felt in your industry. So thank you for that. I invite you now to make a brief opening statement before the committee asks questions.

Mr Manwaring : Thank you for the opportunity to address the committee. It's much appreciated. Before COVID-19, about $17 billion worth of airfare tickets were sold through Australia's travel agents. That was in the year 2019. Australians, even prior to COVID, relied heavily on the expertise of local travel agents around the country, both in the city and in the regional and country areas. About 70 per cent of international bookings booked by Australians were booked through a travel agent. All of those aeroplanes flying overhead, with 300 passengers on them—around 200 were booked by travel agents.

The consumer reliance now is even greater. Any of you would have felt the stress and confusion of trying to sort out COVID impacted travel—the stop-start effects of that et cetera. It hasn't been an easy process. What once took hours can now take days and weeks, even months, in terms of repatriating people back. A lot of that is done by travel agents.

Australia's travel agents have already successfully secured repatriation of some $8 billion in travel credits and refunds—that's just in 18 months—from global suppliers, airlines, tour operators, cruise companies, hotels or anything that's involved in an international journey. That has been credited back to customers in Australia or is in the process of happening. There's still $2 billion outstanding; travel agents continue to work unpaid, basically, trying to chase down this money for customers.

Once travel resumes—and hopefully that's not too far off—our expertise is going to be needed even more. Travellers are going to need travel agents' expertise to navigate complexities and help with uncertainties, delays, restrictions and, also, visa requirements and vaccination certificates, whether digital or paper. We need the ongoing support of government to make sure our sector and the members and staff within our sector are there to provide this critical support.

Australia's travel sector was—this is an unbelievable number—a $45 billion sector pre COVID, one-third made up of airfares and the rest made up of all those other arrangements I mentioned before—cruising, touring, hotels et cetera. It has been in hard lockdown since March 2020, some 19 months ago. We haven't had a stop-start lockdown in our sector; we have been in firm lockdown for 19 months. Our members have almost across the board had to deal with immediate revenue falls of 95 per cent, and more in some cases, in that 19 months.

The travel sector, like the tourism sector, has a critically important role to play in Australia's economy. The ACCC pointed out in its submission that competition in the Australian aviation sector, both domestic and international, has to be safeguarded. In 2019 the $17 billion worth of air tickets provided through the BSP system—the airline settlement system—primarily international, points to that requirement for competition.

Pre COVID, 52 airlines flew in and out of Australia. Qantas in fact had 16 per cent of the international share and about another 15 per cent through Jetstar—so, combined, that represented 30 per cent of the total. So there are still another 70 per cent of customers flying in and out of Australia on other airlines, some 52 of them. Any contraction in those services, domestically and/or internationally, would be highly problematic.

Consumer confidence is the other priority. Consumers and corporate travellers need to know when they make their bookings, whether domestic or international, that their travel plans are not going to be derailed by snap border closures; in some cases people are being advised halfway to their destinations, mid-air. We need all governments to stick to the national cabinet road map for reopening. That's the most critical thing to restore confidence within the travelling public. Announcements must be backed up with firm plans.

We need your help to make sure as many travel agents as possible are supported through this. We need the expertise and the international experience that only agents provide both in country and regional towns, because without a travel agent you are really on your own. That's our little preface.

ACTING CHAIR: That's very comprehensive. Thank you very much.

Senator McCARTHY: Thank you, both of you, for appearing before us today, and thank you for the brief overview you've given us. I might go back to some of those statements you've just made, to get a few clarifications. Firstly, can you tell us how many agencies, that you are aware of, have closed down?

Mr Manwaring : It's a good question, and it's one I would like to give a definite, finite answer to. The reality is: prior to COVID, there were, because of the variations and machinations within our ecosystem, as you could call it, around about 40,000 people that, we know, were involved in the travel industry. The amount of people in the industry now, we believe, is at about 25,000; we've lost about 15,000 members. That's based on some envelope assumptions and it's also based on some fact. Flight Centre, a large listed travel company, had just under 1,000 stores in Australia, and now, from their public announcements, have 370 stores. The other large listed travel company, Helloworld, is signifying they're looking at around 30 per cent reductions.

Based on that information, the information that AFTA has, as AFTA members there were generally around 3,000 stores within the AFTA membership. That at the moment is sitting at about 2,000. There has been in excess of 30 per cent reduction in actual stores. Each store normally has three to four staff. A combination of those figures of our board members consists of approximately 90 per cent of travel, and the advice they are getting at our board meetings is that all of their businesses have contracted by a minimum of 30 per cent. That's in addition to the fact that business itself, in a cash sense, has reduced by 95 per cent.

We're reasonably comfortable that about 25,000 people currently exist. Austrade have some stats regarding members. Around 3½ thousand members applied for grants within the travel grant program, grants 1 and 2, which finished on 30 June. Those applications for the second grant also dipped by some 35 per cent from grant 1. That all seems to come into the realisation—I think that that's a minimum figure. The other thing which makes up that 25,000 is not just storefronts; there has been a movement within the agency field for the last couple of years, and it's been accelerated by COVID, for travel advisers coming into the business and operating as independent advisers from their homes. That headcount alone would currently sit at about 3,000.

Senator McCARTHY: Would that be 3,000 out of the 25,000?

Mr Manwaring : Out of the 25,000; correct.

Senator McCARTHY: So you've got 3,000—

Mr Manwaring : That's included of that, yes.

Senator McCARTHY: who would be working from home, and the remainder would still be working in the stores?

Mr Manwaring : Yes, that's correct. We believe the actual number of people working in travel to be about 25,000. That 25,000 are primarily all working from home in the lockdown states, with stores being closed. Of that 25,000, we estimate that 3,000, or maybe as many as 5,000, are going to permanently change into travel advisers—so some of those people will not be returning to stores. Leases are still held, so the stores are still there, with a bollard out the front type of thing, but it's unlikely that all those stores are going to open—in actual fact, they're not going to open. They will remain at home and work as professional travel advisers under one of the groups.

Senator McCARTHY: When you talk about that number of 25,000, are we predominantly talking about the larger states or right across Australia in the remote and regional areas?

Mr Manwaring : That's across Australia—regional and country. In country towns primarily, where there were three or four agents, there are now two or one. Even in my own group we had 700 travel agents in my normal day job, in Express Travel Group; I own that. We had 700 travel agents in our group in 2019 across three different franchise brands. In a select brand which is in the Chinatown communities around Australia, we had 300 in there. We had another 300 in your normal European, if I can call it that, travel agency store in suburbs and in country towns. We have now dropped to 450 known stores out of those 700. So in my group alone we've lost 250.

Senator McCARTHY: Can I go back to your comment in your statement about travel accreditation. I want to clarify this. You said $8 billion in travel accreditation—

Mr Manwaring : $8 billion in travel credits.

Senator McCARTHY: Credits, yes.

Mr Manwaring : Normally in any given year—in some years it has been $15 billion, $16 billion or $17 billion. 2019 was a strong year, and that carried a lot of agencies into 2020, when we had the first part of the COVID hit. That cash kept them alive. That's what's under stress at the moment. In a normal year, of that $17 billion, about $1½ billion to $2 billion would go to refunds, and the other $15 billion is travel which is ongoing, all the time. What's happened, of course, is that it's gone in reverse and then 90 to 95 per cent of bookings have been cancelled. So that's where that $8 billion has come from.

Senator McCARTHY: And you said $2 billion was outstanding?

Mr Manwaring : We would estimate it to be $2 billion, yes.

Ms Loch : That is just in the context of COVID impacted travel.

Senator McCARTHY: Thank you very much, because this is why we wanted to hold an inquiry to look at the COVID impact. What impact is the $2 billion outstanding having on your members?

Mr Manwaring : It's creating work. That's a live movement of money within the system. That's still creating work with the stop-start measures with borders. Every time a booking's made, they go back in for a refund. They have to be refunded. There's no money earned; it's just work being done to satisfy the customer. The customers, having paid, are generally being told by some of the airlines and some of the operators that their money will now be returned to them in credit, not cash. Those who have used credit cards can force through chargebacks, though, to reclaim their cash. That's ongoing, and a lot of bookings made in the last six months with these stop-start measures are still caught up in the system. So it's from our airlines and our cruise companies. That's where the remaining $2 billion figure comes from.

Senator McCARTHY: Have your members seen much work from the government's discounted flights scheme?

Mr Manwaring : No, unfortunately not. There was some settlement with those vouchers, but the reality is that a lot of those bookings would be made with the airlines and/or the hotels directly. Some of it came via travel agent where people were adding more cash value to it, but it was really using most of that value across a family. It would be settled with the principals directly. Travel is one of those industries that get their supply from wholesalers—airlines, tour operators and cruise companies—yet we actually also compete with those people. They were trying to attract customers directly and bypass the travel agent. Even with that activity and the competitive nature of it, and even post COVID, I think a minimum of 60 per cent of all international travel will still be booked through travel agents. I am including websites in that.

Senator McCARTHY: So that particular scheme, then, was worthwhile for your members?

Mr Manwaring : No. I think it was good for tourism at large and it would have been good for the airlines, but, for our members, no, unfortunately.

Senator McCARTHY: Okay. So what engagement have you had with the government about further rounds of the COVID-19 Consumer Travel Support Program?

Mr Manwaring : Do you mean the turnaround of the program in terms of the agents receiving the grants? That has been regrettably slow, and Austrade have published this. Most of grant 1 has now been completed. We're due for a briefing from Austrade at the end of this week to update us on that. In the January to March period, whilst we were still in JobKeeper mode, it was less imperative that that cash get to agents immediately. That's taken probably six months to be fully rolled out, as opposed to the ideal, which would have been two months. We have rolled into April, May and June with grant 2 with some slight adjustments, and about 60 per cent of those funds have now been distributed. But we are in September, and we would have liked that to be a lot quicker. We're awaiting advice as to our submissions for grant 3, which would likely be the last grant, I think. We would have liked grant 3 to be approved and underway by August at latest, and we're still waiting for advice on submission.

Senator McCARTHY: I have just one last question: if the federal government could do one thing to help your members through these latest outbreaks until our vaccination rates improve and travel resumes, what would it be?

Mr Manwaring : Can I have more than one? In running a business, one of the two largest concerns is retaining the skills in travel. We want to retain the skills, and therefore that becomes payroll support. So payroll support would be No. 1. The irony of the lockdowns in Victoria and Sydney is that, for instance, with my company, I make less of a loss in lockdown than I do out of lockdown, because in lockdown I can receive support for my staff through Centrelink and/or the previous JobKeeper. As soon as they lift that lockdown, I go back to a 95 per cent loss, and all travel businesses suffering that in those lockdown states would be getting some reprieve. So, to answer that question more succinctly, if I had one wish, it would be for a payroll support program nationally, such as was introduced in New South Wales, with 40 per cent payroll relief. It would be provided nationally to all travel agent businesses and tour operators that are currently in the grant systems, to ensure that we can retain staff and that businesses can still be standing when we come out of this after Christmas. There's a real threat that we won't be here if it goes beyond Christmas—that we will lose at least half of those 25,000 we talked about. Businesses now are virtually on the edge.

Senator McCARTHY: Thank you, Mr Manwaring.

Senator SHELDON: Thank you very much to both of you for joining us today and for your evidence so far. This is to either of you, but I would be quite interested if both of you could give a comment on this. The government has just announced that the restart for international travel will now be extended from October to December. What concerns do you have regarding the change in times and the effect on the industry? In particular, are the packages in a position to give you enough support through to December?

Mr Manwaring : I will just say a quick word, LJ, and then you dive in. Thanks for the question. On the first part of that, on the delay, our advice to government at the time when New Zealand was opened was that we thought that that was sort of early. We would have far preferred it to have been a firm opening, and then away we go, without the stopping and starting. As to moving international travel back, I don't think there was ever any chance it was going to be October. Moving it back into December in lock step with the 80 per cent vaccination rate would then give the opportunity to open it once and leave it open. It has to be supported by those vaccination rates, obviously, but, once we do it and then we have green zones like the rest of the world, where millions of people are now travelling, Australia can stop being isolated and start opening up safely. I think that would be a very welcome shot in the arm—no pun intended—for our industry.

On the other side, the package, I think that, without the ongoing support and without confidence returning and definitive open borders, international and domestic, we will lose a lot of people. The only way to stop that rolls back into that payroll support. We have to have a continuation of either Centrelink payments at $1,500 a fortnight or 40 per cent payroll relief for the larger companies that are doing most of the employment but are receiving very little from the grant process.

Ms Loch : I was just going to add to that. There are two issues there. The first is in relation to consumer confidence and the importance of consumers having the confidence to book, knowing that they will be able to travel. The second is the triple and quadruple handling—or sometimes handling six or seven times—that travel agents are having to do as a result of the stop-start booking. These are businesses that were actually thriving. They were showing 11 or 12 per cent growth year on year across the sector prior to COVID hitting. There's no doubt that more than ever, when we are travelling internationally again, consumers will need that expertise and those skills. That's why it's so important that we get ongoing support both to keep the skills in the sector and to continue to grow the sector. Because consumers are going to be left exposed without that support.

Senator SHELDON: There's evidence we've received this morning from a number of parties, including from the Transport and Tourism Forum and the Aviation Ground Handlers Industry Alliance, regarding the inability to have staff available to restart the airlines. Outsourced companies are excluded. They make up many thousands of workers in that sector, and those skills are being lost. The Aviation Ground Handlers Industry Alliance went as far as to say that airlines could be grounded in November, December, January and February, right when the country opens up, because of the problems of disconnect with workers and of there not being trained workers. What do you think the consequences would be if it was the case that we were going through to February next year before we had a proper opening up?

Mr Manwaring : I think that would be less than desirable. That would be disastrous. The businesses that we are talking about in our sector are under extreme stress. Any further delays beyond Christmas would see a large majority of our businesses, and the skills within these businesses, lost forever. Even those people who have moved out of our businesses already won't be coming back. They're now doing other jobs. Travel has never been the highest-paid industry in the world—they're in it for the fun of travel and the delights of dealing with people. So I think people will be earning other money in other industries and staying there.

The airline industry has, I would hope, been able to retain sufficient skills to ramp up scale and capacity very quickly. I was with Cathay Pacific for 30 years, and the sharing of those ground services arrangements provided by dnata et cetera is obviously the key to that. If need be they would have to bring in skilled workers from overseas. The sharing of those people at airports, and maximising the scheduling across all those competing carriers, is critical to that. I'm sure that's in their forward plans to enable them to ramp up capacity very quickly.

ACTING CHAIR: Thank you very much for your time, for your submission and for giving evidence today. We have heard several times today of the distress that has been caused in the industry by the impact of COVID. Please know that you have been heard and you have the committee's support and concern. Again, we thank you for your time. Please go with our thanks.