Travel companies must ensure that they have the correct and consistent paperwork, contractual arrangements and marketing activity in place to demonstrate what sort of business they are operating, says Abta’s Simon Bunce.
Travel agent, but can you prove it? Every year, Abta’s Travel Law event increases in scale and significance and this year’s two-day event at K&L Gates was no exception. Among the topics discussed by a range of industry experts were the Tour Operators’ Margin Scheme (Toms), the Atol scheme and some insights from the European Travel Agents and Tour Operators Association (ECTAA) into what shape the proposed revisions to the European Package Travel Directive are likely to take when it is finally unveiled in the summer.
Perhaps one of the most consistent messages to emerge from the event this year is that now, more than ever, travel businesses must ensure that they have the correct and consistent paperwork, contractual arrangements and marketing activity in place to demonstrate what sort of business they are operating. The authorities (both in the UK and in Europe) are increasing their focus on consumer transparency and it is up to travel businesses to ensure that whether they’re operating as principal or agent, they’re clear about their role in organising or selling travel arrangements.
So what does this mean for the agency model? At the simplest level, it means that if you want to avoid the additional liabilities and tax obligations that come with being a contract principal you must not look or act like a contract principal. On the other hand, if you are an agent that genuinely acts as an agent, you will remain outside of Toms and, if you are retailing other organisers’ packages, you should not be drawn into additional liabilities under a revised PTD.
Recognising the status of agents has been one of the key arguments that Abta has fought for, both in previous test cases (Abta versus CAA) and more recently in Brussels as the policymakers there have been reviewing the Package Travel Directive. In other countries around Europe, travel industries operate very different models so getting the message across that in the UK agents should be allowed to act as agents has been hard-fought.
While we should not jump the gun until a revised PTD is unveiled in July, if the views of ECTAA on the revisions to the scope of the directive are accurate, then it looks like the traditional agency model will be protected. Agents that have all of the correct paperwork and contractual arrangements in place to clearly evidence that they are acting as agents, and not as package organisers (or dynamic package organisers) will be protected from additional obligations and liabilities of these organisers. And the same goes for Toms: if you clearly show in all of your commercial arrangements that you are operating as an agent for the supplier, then you should not be drawn into Toms. Interestingly, it was mentioned that the same may not be true if you act as agent for the consumer, a model often used in attempts to avoid the Atol scheme.
Of course, the devil is in the detail, and the definitions around dynamic packaging and click-through arrangements will be important, so we must wait to properly review the proposals in more detail. In the meantime we have a lot of useful guidance available for members on abta.com to help understand the different business models, including our guidance note: “Agent of Principal – how does your business trade?”
Simon Bunce, head of legal and member services, Abta
Simon's comment was published by TTG.