Thursday, 5 November 2020
Nithe i dtosach suíonna - Commencement Matters
Travel Trade Sector
I thank the Minister of State for coming to the House. I seek an update on the unique and dire situation of travel agencies. The companies are operating at a loss of about 130% in refunding all revenue for a year and a half, pretty much without Government assistance. Moreover, with 3,500 staff throughout the country, the sector is by no means insignificant.The Irish Travel Agents Association has continuously voiced its concerns about the impact of the Covid-19 crisis on travel agencies and has called for the Government to provide assistance to repair some of the damage done to the Irish travel industry.
I have spoken to representatives of my local travel agencies. Anyone from north County Louth will be familiar with Centre Travel, KT Travel, McGuill Travel and O'Callaghan Travel. These businesses combined have been in operation for 180 years, employ 30 staff and have an annual turnover of more than €16 million, so they are by no means small fry. These are small enterprises that give excellent personalised customer service. They were thriving viable businesses but they now see no light. They still give an excellent service with negative return. To give an example, one of these travel agents has had only five bookings since September. This week, it will issue 75 cheques in refunds to its customers. As we know, there are costs associated with refunds and staff are needed to do this work. Other outgoings include cumulative bank charges, office charges, rent and heat. One travel agent has estimated that it takes up to nine hours for each refund to be organised with all the administrative hurdles, telephone calls, emails, etc. All money is going out. Travel agents are not normal retail outlets.
Let us remember that travel agents only make money when customers board a flight and the plane takes off. As we know, some flights are taking off but the Government advice is that people should not travel so people are not travelling. In such instances, under EU law, travel agents are obliged to refund the cost of flights whereas airlines are not obliged to do so. Five travel agencies have gone into liquidation. Under EU law, customers are refunded. Must the Government or the Commission for Aviation Regulation now provide refunds?
Travel agents are seeking clarity on whether they are eligible for the Covid restrictions support scheme. Is the scheme based on turnover or profits?
The refund credit note is of no practical assistance to travel agencies as it only protects customers if a travel agent goes into liquidation. A refund credit note does not help travel agents to keep their business running and only protects customers. It is important that customers are protected but these businesses still need a refund.
I stress that the travel agents that I have spoken to respect and understand the restrictions but they need help to ensure their businesses still exist when the restrictions are lifted.
I thank Senator McGreehan for raising this very important issue. She raised it as a national issue but recognised the importance of the sector to the north east and listed travel agents in County Louth.
I am very familiar with the important service that travel agents provide nationally to the industry. They support the corporate sector and service the domestic market and people here who travel abroad. I recognise that travel agents put a lot of work in at the start of the pandemic and worked with us. I have certainly seen that in the case of Martin Skelly in Navan Travel and Eimer Hannon in Hannon Travel. Travel agents have worked with the State to bring people who were stuck abroad home. They have also engaged with customers in the past couple of months and tried to provide that service. At the start of Covid, the sector stepped up and helped to get people home who were in trouble and solved a lot of issues. The travel sector is very relevant in local communities.
I recognise that many businesses and thousands of people working in the travel agent industry have been severely impacted by the collapse in national and international travel and tourism as a result of Covid-19 restrictions. The needs of these businesses and their employees have formed part of our consideration of the range of grants and funding assistance that we have introduced in budget 2021 and in the July stimulus plan. We are developing our recovery plan, which will be launched in November or December.
I agree with the Senator that the travel agent sector recognises the importance of restrictions. Travel agents have always stressed at our meetings that they recognise the importance of protecting public health. The issue they have is the survival of travel agencies.
I met representatives of the Irish Travel Agents Association in mid-September, as did many other Departments. I have received further representations from the association since the publication of budget 2021. I have heard their case, which they have also made to many other Members of both Houses.The Senator is correct in saying they are unique. Compared with other retailers, they are a very different business model.
The Irish travel sector is a strong, dynamic industry which employs over 3,500 people across Ireland. Last year, the Commission for Aviation Regulation reported a €1.2 billion turnover for Irish travel agents in 2018, as part of its annual report for that year. Travel agents are engaged in all aspects of overseas travel, including leisure, corporate and visits to family abroad. We are all very familiar with this service. From a departmental corporate travel point of view they are very important.
There is interdependency between outgoing and incoming air and sea travel volumes. The travel industry is a nationwide SME sector, largely comprised of family-run businesses employing over 3,500 people in towns and cities across the country, including in rural Ireland and the north east as mentioned by Senator McGreehan. The ITAA has informed the Government that the majority of Irish travel agents are at risk of long-term unemployment unless immediate action is taken, which backs up the Senator's statement that it is important that this sector benefits from supports that are provided.
The Irish travel industry has remained active since March to service customers with cancellations, refunds and rebooking holidays. This work is ongoing. These companies could not close even though they were effectively blocked from trading and they have had to continue to carry a proportion of salary and overhead costs. We recognise that. The companies make an argument which is unique in terms of the arguments being made by other businesses. Travel agents provide an essential service to customers. The ITAA has told us that if they close this responsibility will fall to the Commission for Aviation Regulation in respect of which there will be associated costs. It is important that we ensure the supports being made available are reaching the sector.
In recognition of the importance of the sector and of businesses in many other sectors, the budget provides for a significant package of tax and expenditure measures to build the resilience of the economy and to help vulnerable but viable businesses across all sectors. We are trying to help businesses to operate as best they possibly can over the next couple of months, when allowed, in order that they can thrive again in the years ahead, which this sector believes it can do. The sector believes that if it can get through the next six to eight months it will be in a strong position to recommence services, create jobs and operate in the Irish market in the years ahead.
Through the measures announced in the July stimulus package, including the employment wage subsidy scheme, the restart grant+ and the other variations of it and the low-cost loans and commercial rate waivers, we are providing supports to suit the different businesses. As many businesses have had to close under the level 5 Covid restrictions we have made changes to the pandemic unemployment payment, PUP, and the employment wage subsidy scheme, EWSS. The new payment structure for the PUP includes an increase in the top rate to €350 for those who were earning in excess of €400 per week. This change to payment rates will apply in respect of all existing and new applicants. The travel industry would have benefited from the initial wage subsidy scheme and probably took the view that the new scheme did not suit its needs. The increased rates should be of assistance to it. The EWSS is also being amended to align with the amendment to PUP, with the top payment increasing to €350 for those earning over €400. As part of budget 2021, the new Covid restrictions support scheme, CRSS, is now operational through Revenue and offers a targeted, timely and temporary sector-specific support of up to €5,000 per week to businesses forced to close or trade at significantly reduced levels due to Covid. This is based on turnover. I am aware that Members of the Houses have received representations on travel agents' eligibility for the scheme and the full details will be confirmed as part of the Finance Bill, Second Stage of which is currently before the Dáil and will probably come before this House next week. We are providing more and cheaper loan finance through MicroFinance Ireland, the Strategic Banking Corporation of Ireland, SBCI, and the new €2 billion credit guarantee scheme.
The level of help now being provided to businesses across all sectors is unprecedented and ahead of that available in many other jurisdictions. We will continue to keep the mix of support for specific sectors under review to ensure businesses can reopen as international travel recovers. It is important that the travel sector can benefit from these supports as well. I look forward to the completion of the debate on the Finance Bill over the next week or two to bring clarification to this issue.
The Senator mentioned the refund credit note. People might say it did not help the sector but the purpose of it was to give confidence in the early stages to those customers who did not need a refund. I am conscious that people in difficult times financially might have no choice but to seek a refund of money they had on deposit with a travel agent but there are people who might have been in the position of not having to seek a refund and were able to leave the money with the travel agent to help support the sector. As I said the purpose of the refund credit note was to provide confidence to a customer who had been loyal to a travel agent for many years.If the customer was willing to leave his or her money on deposit, the State was saying the money would be paid out at a later stage. The scheme aimed to provide confidence. It did not get enough of a hearing and maybe many customers did not hear about it or fully understand it. It was an attempt to stop the withdrawal of cash from travel agents and to stop people seeking their deposits back. That was the intention. The scheme had some impact but maybe not enough and it was certainly not enough on its own to help the sector. That is why we have announced a range of other supports. The case the Senator makes for the CRSS is an important one.
I thank the Minister of State for the clarity on the Covid restrictions support scheme. He and I are in complete agreement. This is a unique industry that is not at all like normal retail. The doors of travel agents are open virtually at the minute and the money is constantly flowing out. I appreciate the Minister of State's time and the clarity he has provided. I understand the refund credit note was intended to give customers assurances but it did not really help the travel agents. I look forward to giving back some positive news to some of the travel agents in Dundalk.
I thank the Senator again for raising this important issue. I will make sure her arguments are conveyed to the Ministers for Finance and Public Expenditure and Reform. We are committed to ensuring we have an appropriate mix of financial help and assistance in place for the businesses most severely impacted by Covid-19. We are continuing to see a strong take-up of the range of supports available for businesses but I ask businesses and all sectors to look at the supports again, visit our websites and use our business support helpline to get the information that is available. Businesses that could avail of these opportunities are not drawing them down yet and I appeal to them to use those supports. I encourage travel agents to ensure they are availing of the range of grants and other funding schemes that are in place. I am sure most of them are doing so but some might not realise they can still avail of some of the schemes. They should check for the most up-to-date version of every scheme.
The details of the CRSS are being debated as part of the Finance Bill, which is on Second Stage in the Dáil. Travel agents can avail of the scheme under levels 4 and 5. I understand their argument and the argument that many in these Houses are making that they be included under level 3. That is an issue on which the Tánaiste and I are engaging with the Minister for Finance, and I am sure other Ministers such as the Minister for Environment, Climate and Communications, Deputy Eamon Ryan, and the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media, Deputy Catherine Martin, are working on this issue as well.