Thunderstorms rock Travel Convention – and we’re not just talking about the weather

On Holiday Group chief executive Steve Endacott laid into ABTA’s stance on reforms to the EU package travel directive on stage at the Travel Convention days after publicly slamming the Association in his blogpost.

Endacott said he’d had no choice but to make his grievance public because of what he saw as ABTA’s unwillingness to oppose plans in Brussels to make agents shoulder responsibility for consumer protection.

He accused ABTA of being weighted towards operators and claimed its acceptance that agents selling dynamic packages – including the online travel agents – would have to offer consumers more protection was "highly dangerous".

Endacott said ABTA had formed its stance based on the fact that 85% of members responding to a consultation on PTD reform in 2009 said they would like greater consumer protection, but he said their response was based on the assumption that airline holiday bookings would have been included in legislation by the time the reforms kicked in. In fact, airline bookings remain outside Flight Plus and the PTD.

"I don’t believe ABTA has a mandate from their membership," he said. "They should go back to members and ask them if they are willing to go in if airlines aren’t in."

Endacott said the EU proposals would create an uneven playing field with agents unable to compete with airlines and websites offering click-through bookings, which EU bureaucrats have so far failed to find a way to incorporate into the Directive.

Endacott had the backing on stage of Chris Photi , a senior partner at travel accountants Whitehart Associates, who said that as things stand agents risk losing a sixth of their margins in VAT as, if the EU does away with the agency model and treats them as principles for the purpose of consumer protection, HMRC will decide they should pay VAT under the tour operators margins scheme (TOMS).

However, Photi said ABTA was not the right body to lobby on behalf of agents against the changes; he suggested they take their fight direct to the UK government.

Endacott indicated – but did not say outright – that he had the support of most other OTAs and Barrhead Travel, and Travel Counsellors chairman David Speakman, a non-ABTA member, has publicly backed his stance.

He said that OTAs wouldn’t leave ABTA – we mustn’t sulk, he said – but added that they were in the process of creating their own lobby group to battle for the right to keep the Flight Plus model for travel agents in the UK. "It is time to wake up guys and fight the fight now," he said.

Endacott said it wasn’t just about avoiding VAT liability – although he said he was concerned that if online travel agents lost their agency status,  HMRC would "slam them with a 20% VAT bill – he claimed he was just as concerned about the possibility that the EU was proposing to make agents share responsibility for health and safety with tour operators. "We have over 200,000 hotels and it is impractical for us to do a health and safety audit of every one. Individual hotels should have a certificate that shows they have been checked for Health and Safety."

He said the EU’s proposals would make booking through an agent so expensive that people would stop going to travel agents and start putting together independent trips, which would result in less – not more – protection.

ABTA head of public relations Luke Pollard, who has been having monthly meetings in Brussels, stressed no-one knows what will be included in the revised PTD until the proposals are published in the first quarter of 2013. So far, he’s received only "hints" he said. However, Endacott insisted agents couldn’t afford to wait for the proposals before deciding to act. "When the EU comes back with its proposals we will have a very short window to react. We need to mobilise agents now. I don’t accept the EU should tell UK agents what to do when we have a system that works.

"ABTA is going in a direction that is highly dangerous for OTAs," he said.

However, ABTA chairman John McEwan today dismissed Endacott’s earlier proposal that ABTA should have a referendum on the PTD reforms. "I don’t agree with that," he said. "You can consult heavily with members but you can’t run an association with a referendum.

"We will engage with the membership through roadshows to make sure we have a full picture of what members are feeling, then the Board will go back to Europe to represent the interests of the whole membership.

"We have not backed away from preserving the agency business model, we have said agency status should be preserved." McEwan said ABTA was taking advice from specialists on the VAT implications for members if this was lost.

ABTA head of legal and member services Simon Bunce agreed that it was important that retailers maintained their agency status. "Making airlines responsible for the ash cloud was not a proportionate response (by the EU) and making agents responsible for an ash cloud certainly would not be a proportionate response," he said.

Andy Cooper, Thomas Cook Group director of government and external affairs, said agents and operators agreed on 95% of the issues raised by the reforms. "We should unite and agree on the core principles," he said.