How your business trades
You need to understand your status when buying and selling travel services; this can affect your ABTA membership, financial protection and liabilities to consumers.
Travel agents
Travel agents sell travel arrangements and products on behalf of a principal. They do not sell their own products. Travel agents bring about a contract between the consumer and the principal but they are not party to the contract.
As a travel agent you:
- Owe a duty of care to the principal
- Have an obligation to account to the principal
- Accept commission not remuneration by private profit
- Market and promote a principal’s products
- Have authority to collect payment, apply and collect cancellation fees on behalf of the principal.
Principals (tour operators)
Principals are contractually bound to consumers to provide travel services. Examples of principals are traditional tour operators, suppliers and airlines. Principals may sell direct to the consumer or through travel agents.
You are a principal if:
- You advertise and sell travel arrangements
- You issue invoices in your own name
- Bookings are subject to your own terms and conditions
- Representations are made about your liability for the actual provision and performance of the contract
- Representations are made about your health and safety obligations
- You have to have insurance cover for liability claims
- You mark up a supplier’s price
- Your supplier agreements specify your respective roles
- You are liable for VAT under the Tour Operators’ Margin Scheme.
A principal’s business can be to sell licensable products – these are travel arrangements (packages that include flights and Flight-Only) covered by an ATOL.
However, a principal can also sell non-licensable products – these are travel arrangements with no flight included (packages such as cruise, coaches and ferry, and single element [non-inclusive] e.g. accommodation-only).
Remember The Package Travel and Linked Travel Arrangements Regulations 2018; if you’re selling travel services together they may form a package within the regulations and you will be acting as a principal.