Speech by Mr. Louis Ng Kok Kwang, MP for Nee Soon GRC at the Second Reading of the Travel Agents (Amendment) Bill [Bill No. 41/2017]
Sir, I stand in support of this Bill. Providing better consumer safeguards against errant travel agents, while balancing this with measures to facilitate a pro-business environment for the travel industry is welcomed.
I have comments and queries on two aspects of the Bill.
STB’s powers to make regulations which impose restrictions or obligations on contracts between travellers and travel agents
Clause 19 expands the regulation-making powers of STB. Amongst other things, this clause introduces a new section 28 (1) (ga)(i) which confers powers on STB such as “imposing restrictions or obligations on licensees in relation to any variation or termination of a contract for the supply by the licensee of a travel product”.
This is an important power which allows STB to step-in and ensure consumers are well protected in the event that travel agents are unable or perhaps unwilling to fulfill their contractual obligations.
However, I wonder if this broad power as it is currently drafted will have any practical use in a more likely situation, such as if a repeat case of Misa Travel occurs. Misa Travel closed in June 2017 and customers who had paid for travel plans and products were left in the lurch.
For illustration purposes, let’s assume there is a travel agent who is not fraudulent and has a legitimate business, however this travel agent suddenly shuts down or is unable to fulfill its primary contractual obligation of ensuring travel products are supplied to travelers, for reasons whether in their control or not. This is often the situation consumers face.
Even if STB invokes this power in the new section 28 (1) (ga)(i) to vary the contract or even direct that the said travel agent has to compensate or refund the travellers, it is unlikely that the travel agent can, will and want to be able to fulfill their obligation.
If the travel agent, could, would and wanted to fulfill its obligations, there would have been no need for STB to step in. Can Minister clarify how this new section will be able to help consumers in cases similar to Misa Travel?
Travel Industry Compensation Fund
On this note, to complement this new section 28 (1) (ga)(i), will the Minister consider establishing a Travel Industry Compensation Fund to provide reimbursements as a last resort to travellers in specific situations such as insolvency of the travel agents.
This Compensation Fund can be financed by all registered travel agents. While this will mean that travel agents have to pay into this fund, it is beneficial in the long-term to instill consumer’s confidence considering that the travel industry is one of the top 10 most complained about industry according to CASE.
This may help with providing a more robust regulatory framework and eventually re-direct much of the travel purchases and revenue back to travel agents, benefiting the travel agents. This might help in reversing the trend of travelers purchasing travel through direct channels.
From a policy perspective, this Compensation Fund provides accountability and immediate practical recourse to travellers. I understand that this is the model already adopted in Ontario, Canada and Hong Kong. I do hope we can also implement this in Singapore.
New, innovative travel providers
Secondly, a minor clarification on whether the Travel Agents Act and this Bill covers businesses which operates innovative travel models powered by technology such as Airbnb Experiences, Tripadvisor or Wego?
I wish to clarify whether such businesses are caught by the definition of licensees under the Travel Agents Act? If not, what plans are there to regulate such businesses to ensure travellers who purchase travel products via such businesses equally have consumer safeguards.
Sir, notwithstanding the above clarifications, I stand in support of this Bill.