25 Nov

Financial protection in the travel industry: Consultations to kick off reform

A consultation on the review of the EU’s Package Travel Directive will tomorrow kick off the first of three consultations in the important area of financial protection. It’s anticipated that these consultations will instigate major reforms which will protect more consumers and potentially, will have far reaching implications for travel businesses.

Mark Tanzer, ABTA Chief Executive said: “The next few months will be critical for the travel industry to submit their thoughts on all the issues covered by these three major consultations. Of course ABTA Members can respond separately and directly to all the consultations if they wish, but ABTA is committed to making it as easy as possible for Members to submit opinions, so that those voices do not get lost. We will put together questionnaires, post them on our website, collate the answers and submit responses. These consultations are hugely important to our Members and all their customers.”

ABTA is joining forces with representatives from key organisations within the travel industry including FTO, AITO, PSA, Advantage and Worldchoice to form a working party, which in the first instance will gather information and data to scope out the issues which will be addressed by the Review of the Package Travel Directive. This information gathering exercise will enable the industry to give full responses to the Commission.

The three different consultations are:

• The EU Consumer Affairs Commissioner Meglena Kuneva, will launch a consultation paper to review the Package Travel Directive, along with a consumer detriment survey of the package travel sector this Thursday (26 November).
• The Department of Transport will consult imminently on reforms to the ATOL scheme.
• A consultation document on air passenger rights, including a section on protection against airline failure, was expected to be published this week. However, we understand that has now been delayed until the new European Commissioner for Transport has been confirmed, probably in late January.

A Q&A document with more information can be found on the ABTA website.

The EU Consumer Affairs Commissioner has made it very clear that the current Package Travel Directive law is out of date and not acceptable. The EU Commission has committed to a review of the Package Travel Directive with the objective that DIY travellers will be protected too. The Commission particularly wants to plug gaps in protection arising out of internet bookings and ‘DIY’ holidays, as it is widely acknowledged that many travellers are unaware that they are not always covered if something goes wrong.

This directive will need to be translated into UK law, and so will still be some years in the making, which is why ABTA has been lobbying the CAA to reform the ATOL scheme. The CAA is due to kick off a formal consultation process at the start of December, and changes to the scheme could be implemented within 2010.

ABTA’s own proposals to change the ATOL scheme aims to extend it and make it fit for purpose for any new EU Directive.

ABTA believes:
• The scheme should include all sales of flights plus other services whether or not they are package holidays.

• The scheme should include the sales from all travel companies, including retail agents and principals as well as airlines, although it is feasible airlines could only be included following a review of the Civil Aviation Act.

• Any company selling a flight plus other services will be a licence holder unless acting as the agent of another company selling the flight and other services under its own licence

• Security should be provided by the licence holder through a mix of levy, bonding and other acceptable means at a level acceptable to the participants.