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🇦🇺 Australia /Economy & Trade

Dream holidays shattered in $4.3 million travel agency collapse

From ABC Australia · () English

Summarized and contextualized by DistantNews.

At a glance

News Named sources Outcome reported
  • Melbourne-based travel agency AVG Travels collapsed in May, owing $4.3 million to nearly 800 creditors.
  • Customers lost millions of dollars, with some stranded days before their holidays.
  • Travelers are calling for the federal government to reinstate a national consumer protection scheme for travel bookings.

Australian travelers have collectively lost millions of dollars following the collapse of Melbourne-based travel agency AVG Travels, prompting urgent calls for federal government reform of consumer protections within the travel sector. The agency, which specialized in discounted international tour packages, was placed into liquidation in May.

There was no prior warning, no communication about their deteriorating financial position and no offer of refunds or alternative arrangements.

— Arun JhunjhunwalaDescribing the lack of communication from AVG Travels before its collapse.

New documents reveal AVG Travels owes approximately $4.3 million to nearly 800 creditors, including customers, employees, and suppliers. The company's assets are valued at only $83,000. Liquidators have informed affected clients that refunds will not be provided. Many travelers reported being left stranded just days before their scheduled overseas holidays, with no prior warning or communication regarding the company's financial distress.

The collapse has spurred a petition with over 1,000 signatures demanding stronger safeguards for consumers booking through travel agencies. Signatories, including AVG Travels customers, urge the government to reinstate the Travel Compensation Fund (TCF). This scheme, previously mandatory for licensed agents, would have compensated travelers for insolvencies but was abolished in 2014 to reduce red tape.

This isn't just about AVG, it's a systemic failure in the way the travel industry is regulated in Australia.

— Arun JhunjhunwalaCommenting on the broader regulatory issues highlighted by the agency's collapse.

Arun Jhunjhunwala, whose extended family of 45 people lost their $60,000 holiday booking to China, launched the petition. He criticized the lack of communication and transparency from AVG Travels. The company's membership with the Australian Travel Industry Association was canceled in August 2022 due to failure to meet financial and ethical standards. Another agency, Traveldream, also collapsed recently, leaving travelers out of pocket and stranded abroad. Jhunjhunwala described the situation as a "systemic failure" in travel industry regulation, leaving consumers with little hope of recovering their funds.

When these companies collapse, people are left as unsecured creditors with little to no chance of recovering their funds.

— Arun JhunjhunwalaExplaining the financial vulnerability of customers after an agency fails.
DistantNews Editorial

Originally published by ABC Australia. Summarized and contextualized by our editorial team with added local perspective. Read our editorial standards.

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