Flight Centre, Agents Pay For Overcharges

By | June 28, 2017

Former Flight Centre agent Vanessa Barrett this month pleaded guilty to defrauding Australia’s Northern Territory of more than AU$110,000 by falsely inflating travel invoices. Barrett is one of more than a dozen agents Northern Territory police have investigated during the past few years for alleged fraudulent activity related to a government pensioner travel program, according to media reports.

The vast majority of the money went to the agents’ employer, Flight Centre, which returned more than AU$2 million (US$1.5 million) as part of a settlement with the territorial government. The company attributed the refund to a failure to comply with the pensioner program’s rules, according to published reports.

Barrett admitted to submitting “169 false invoices with inflated flight costs for reimbursement by the Northern Territory Health Department, when the actual cost of flights she purchased for pensioners was much cheaper,” according to Australian Broadcasting Corporation.

Barrett’s defense attorney described “the false invoicing practice as ‘widespread,’ used by travel agencies across the Northern Territory and discussed at Flight Centre staff meetings. It was a universal and common practice.”

Flight Centre’s practice of marking up travel sales drew outrage in Canada three years ago and in the United Kingdom last year.

Barrett has yet to be sentenced. The prosecution is recommending three years’ incarceration but her attorney requested home detention. The case is adjourned until late July.

Citing the ongoing legal proceedings, a Flight Centre media relations official declined to comment. In the past, the company denied any systemic practice of deception but acknowledged possible “isolated” behavior. It has said it frequently uses its own credit to purchase tickets, and in 2015 described that as a client service.

Vancouver-based North South Travel last year posted guidance, based on a document by The Travel Group (also of Vancouver), to help prospective clients identify when a travel agency is taking a retail-oriented approach to corporate travel.

These TMCs sought to highlight signs that hidden markups may be intrinsic to a potential provider’s business model. Possible red flags include very low transaction fees, no change fees and the agency listed as the merchant on card statements rather than the airline.

“If you do not understand how your TMC is making their money, you are most likely being taken advantage of,” according to North South general manager Liz Fleming.

“In the consumer arena, it’s ‘buyer beware.’ I guess I have no objection to hidden markups, although we wouldn’t do this,” said The Travel Group president David Elmy. “But when an agency passes itself off as a TMC and engages in these practices, that’s when I have strong objections. They are exploiting the years of hard work genuine TMCs did to develop a reputation for transparency and honestly working in the corporate client’s best interests.”

Flight Centre has been attempting to defend itself against the most critical of comments by current and former employees on Glassdoor.com. Suggesting the practice is ongoing, multiple reviews this year referenced pressure on agents to mark up in order to earn commissions. Two reviewers this year called the scheme a ripoff. According to a Flight Centre official posting in response, the company has asked for at least one review to be removed “although Glassdoor will not remove it. The statement regarding ‘ripping people off, normally old retirees’ is defamatory.”

Barrett was charged with “obtaining benefits by deception,” which according to Australia’s legal code requires authorities to prove the accused obtained financial advantage for themselves or another party using deceit and dishonesty.

Flight Centre-affiliated agencies came under investigation more than two years ago in the Northern Territory, according to reports. This followed a 2013 Ernst & Young investigation that identified overpayments by certain Flight Centre branches in Australia. One independent agency owner who pleaded guilty last year to defrauding more than AU$40,000 had allegedly learned how to inflate invoices as a Flight Centre employee more than a decade ago.

About one-third of Flight Centre’s global travel sales are for corporate travel, according to company financial reports. Flight Centre claims its corporate brands collectively rank among the top five in the world.

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Author: Jay Campbell

Jay Campbell in 2004 created travel business newsletter The Beat, in 2006 co-founded Travel Procurement magazine and in 2010 integrated them into Northstar Travel Media's BTN Group. He served as editorial director until 2013. Jay made his travel industry media debut in 1993 at the Air Travel Journal of Boston while earning his undergraduate degree in journalism at Boston University. More on LinkedIn.