Ms Cathy Mannion:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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