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How your business trades
You need to understand your status when buying and selling travel services; this affects your ABTA membership, financial protection arrangements and liabilities to your customers.
ABTA admits travel businesses that conduct retail business and that conduct principal business in the UK. We will need to know how you’re trading as part of the application process.
Retail business
Retail business is where you act as an agent for a principal. An agent brings about a contract between the customer and the principal, but they are not party to the contract.
As a travel agent you:
- have agreements in place with the principals you’re working with, appointing you as agent
- tell your customers that you’re an agent and with whom they’ll be in contract (the principal).
Other key features of being an agent include:
- marketing and promoting the principal’s travel services
- authority to collect payment and apply cancellation fees on behalf of the principal
- an obligation to account to the principal
- remuneration by way of agreed commission paid by the principal.
Agents can sell a variety of travel services from their principals, for example, package holidays, flights, accommodation.
If an agent organises its own packages, as set out in the Package Travel Regulations, then it will have responsibility for financially protecting those packages, and liability to its customers for providing the packages. This happens where an agent doesn’t sell a package put together by another organiser, but combines travel services itself. For example, it has a website where consumers can put together a flight from an airline and accommodation from a hotel supplier. These are sometimes known as “multi-contract packages”. The agent is still acting as an agent, but has the responsibilities set out in the Regulations.
Principal business
Principal business is where you act as a principal. Principals are contractually bound to customers to provide travel services. Examples of principals are traditional tour operators, suppliers of travel services such as accommodation and airlines. Principals may sell direct to customers or through travel agents.
Typically, a principal will:
- issue their own documentation to the customer,
- have terms and conditions (which may include cancellation terms and provisions),
- set the price of the service(s) and
- be responsible for the actual provision of the service(s).
Principal business can include the sale of package holidays, or other services such as flight-only and accommodation-only.
When we refer to licensable business, this is your sales that are covered by an ATOL: flight-inclusive packages and flight-only.
Non-licensable business is sales that don’t include a flight e.g. package holidays where any transport element may be coach or ferry; cruises; accommodation-only etc.