Travel agent advocacy: The year in review

By Eben Peck
Eben PeckAnnus mirabilis is a Latin phrase that means "year of wonders" or "year of miracles." If ever there was an annus mirabilis for the travel agency industry, 2013 was it, at least for those of us who work in the government affairs business. Several end-of-year wrap-up stories have graced the pages of Travel Weekly over the past few weeks, so we thought we'd add our two cents from an ASTA advocacy perspective.

State attempts to tax travel thwarted

Faced with chronic budget problems and unfunded pension liabilities in the trillions of dollars, several states looked at the travel industry (and travel agents in particular) and saw a piggy bank that needed tapping. The most insidious of these proposals were those to expand state sales taxes (generally applied to tangible goods) to service industries like travel.

In the worst cases, proposals would have applied to travel agency gross sales, which betrays a fundamental misunderstanding of how our industry works, as so much of agency sales are "pass-through" funds that legally belong to suppliers. It is no exaggeration to say that this would put a lot of agencies out of business; we estimated that the average Minnesota agency would have seen its tax bill increase by $300,000 a year.

ASTA CHARTA number of states, including Ohio, Minnesota and Virginia, considered sales tax expansion bills, but thanks in part to robust grassroots action by ASTA chapters and members, none advanced.

It didn't stop there. During 2013, state, county and even some municipal governments took up proposals to apply hotel occupancy taxes to the full price paid by consumers for booking a hotel room. While purportedly aimed at the big online travel agencies, these proposals also apply to markups and transaction fees that a traditional travel agency might charge for hotel bookings. With the exception of an Oregon bill, none of these proposals advanced, thanks again to ASTA member efforts.

As if that weren't enough, the Washington legislature considered a bill to increase the state's "business and occupations" tax rate on travel agency commission income from 0.28% to 1.8%, a sixfold increase that would have cost Washington agencies nearly $6 million a year in new taxes. After an ASTA-led grassroots campaign triggered email from 280 travel agents to legislators, the proposal was dropped.

All in all, 23 of the 24 state tax bills that would have had an impact on our industry were defeated, saving travel agents almost $170 million in new annual taxes.

Travel insurance reform advances

In 2013, great strides were made toward replacing the outdated, confusing 50-state web of regulations governing how travel agents offer travel insurance to their customers. Travel insurance offers tremendous value to consumers, and offering insurance is a great revenue source for agents.

Over the past few years, working with the U.S. Travel Insurance Association, ASTA was able to persuade the National Association of Insurance Commissioners and the National Conference of Insurance Legislators to create a single standard for state regulation of travel insurance.

Once this standard is in place nationwide, travel agents will be able to offer travel insurance to their customers, regardless of where they are located, without a license.

Through 2013, 21 states have adopted the standard, and we hope to get to the "promised land" -- all 50 states -- by the end of 2014. Getting a national standard in place will be a boon for our industry, eliminating a significant regulatory burden for the travel agent channel and saving agencies thousands of dollars in annual licensing costs, while reducing their risk of noncompliance.

Congress addresses flight delays

In a day and age when Congress can't agree on what day of the week it is or whether the sky is blue, it nevertheless moved with lightning speed in April to overturn air traffic control furloughs that threatened widespread flight delays and cancellations.

Across-the-board federal budget cuts known as sequestration became real for the travel industry early this year when the FAA announced widespread furloughs -- unpaid leave -- of air traffic controllers, which would have affected 6,700 flights a day and meant a reduction of up to 40% in flight arrivals at certain airports.

Unwilling to allow Washington budget problems to cripple an activity as essential to the economy as travel, the industry banded together to move Congress to act.

For its part, ASTA issued a "call to action" to our members asking them to weigh in with their legislators, and members responded with nearly 1,700 emails to Congress in less than 24 hours.

The result? Less than a week after the FAA's announcement, Congress passed (and the president signed) legislation giving the Department of Transportation (DOT) the flexibility to transfer funds within the department to prevent essential employees, such as air traffic controllers, from being furloughed.

The year ahead

There were other headlines, as well: an uptick in DOT fines on agencies for codeshare and full-price advertising violations; DOT proceedings on airline ancillary fees and new air distribution systems; and the continued rollout of "trusted traveler" airport screening programs, to name a few.

But this much is clear: 2013 was one of the most successful advocacy years in recent memory, maybe ever, for ASTA and our industry as a whole. At all levels of government, we worked successfully to defend and promote the retail travel distribution channel, and of course we were able to do this only because of our members' support for their trade association.

Myriad challenges lie ahead in 2014 and beyond, driven by "big debt" (federal, state and local authorities targeting the industry for revenue) and "big data" (transformational changes in travel distribution that will require new knowledge and potentially more investment).

Our success in 2013 and our readiness to face the battles to come reinforce the need for the travel agency community to have a strong trade association in ASTA, so that we can continue to protect your interests anywhere and everywhere.

Eben Peck is ASTA's vice president for government affairs. Contact him at epeck@asta.org. 
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