Online start-ups turn to TTA to hurdle barriers to entry

UK travel agency consortium the Travel Trust Association has claimed online travel start-ups are turning to it in growing numbers as they face increasing barriers to entry.


Gary Lewis, TTA managing director, said the group offered a way of breaking into the industry which has become harder due financial constraints, in particular demands from credit card companies.


He said the consortium welcomed 123 new members last year, only 20 of which were existing businesses and many of which were small online start-ups.


Although the consortium loses around six members a month Lewis said it has a healthy pipeline of enquiries, usually numbering 64-70 each month, and adds around 10 members every month.


Lewis said the big problem for new companies was access to affordable merchant facilities and the collapse of the bonding market following a shake-up to the Atol customer protection regime.


Last week Travolution sister publication Travel Weekly reported how Barclaycard had slapped an additional charge on travel firms as credit cards become increasingly exposed to company failures.


“Travel is very entrepreneurial and companies have been looking for different ways of surviving in the industry. We can bring them into the market,” Lewis said.


“These new entrants aren’t necessarily travel people, they are often technology people who have a niche product and are thinking they can drive their business forward.


“We have guys coming to us from certain destinations who have fantastic product and with the power of online marketing they can generate their clients business.”


The TTA was established 20 years ago next year as an alternative to Abta membership allowing firms to operate in the industry without some of the financial constraints the association demands.


It operates an independently administered trust account and, uniquely, has agreed a franchise model for Atol membership with the CAA known as the T-Atol under which it effectively regulates members.


Although Abta has always been implacable opposed to trust accounts and has been an outspoken critic of the TTA it is now considering bringing in its own as further Atol changes loom.


This flight-plus reform seeks to bring dynamic packaging agents into Atol, something that critics say could increase the barriers to entry because firms under four years old must still provide a bond, or force firms to restructure to avoid the rules.


“It ironic now that the industry is talking about trust accounts to solve problems. The bonding model has not worked and Abta has moved away from it because it gave it too much exposure.


“The real cost of this is that responsibility has been moved on to the merchant acquirers and they have changed their model for working with the industry. This is an opportunity for us because it raises awareness that the trust account model is a solution.”


The TTA merged with the high street travel agency consortium Worldchoice three years ago and Lewis said together it now offers an entry level model as well as a more traditional Abta form of membership.

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