The following article was first seen in ABTA's Travel Law Today Autumn 2018 edition and written by Joanna Kolatsis, Founding Director, Themis Advisory.
We waited with bated breath for Government guidance on the Package Travel and Linked Travel Arrangements Regulations 2018 hoping that it might shed some much-needed light on what seems to be an even more complex regulatory environment. Unfortunately, while all hope is not entirely lost, it seems yet another opportunity was missed to give the industry guidance on the nuances of the PTRs that have quite a few of us scratching our heads. These are the areas I believe would have benefited from further clarity:
We were all surprised when the CAA confirmed a third ATOL Certificate covering multi-contract packages. It was latterly explained that this provided a middle category for ATOL purposes that has essentially replaced the Flight Plus ATOL Certificate. Having scoured the BEIS Guidance to find any reference at all to the make-up of this new type of package, I could find only one. This simply confirmed that “Package Categories 2-6 apply even if multiple contracts are concluded” (Para 11).
We now have the odd dilemma of a potentially new type of package available to the consumer that confirms the seller of the multi-contract package as organiser, but also confirms that the traveller has individual contracts with each of the suppliers named.
On the face of it, this is of course compliant with the Regulations but it would have been much simpler to remain with one package definition as per the PTRs without extending this. The rationale given for this decision was to enable Flight Plus providers to continue under the new regime without disrupting their businesses to any great extent – no one can argue with that. However, if BEIS were happy to include reference to this in their Guidance, it would have been helpful to have provided some actual guidance as to what this would look like in practice.
Under the old regime, we faced questions about the scenario under which any retailers who added a service to an existing third-party package might have to take on the responsibility of organiser. Let’s call this ‘Package Plus’. This situation will continue to arise under the new Regulations.
There is absolutely no reference to this type of service in the Guidance, although the reality is that this type of service will continue. However, it seems inherently unfair for retailers who add a simple travel service to a package that is already financially protected to bear the brunt of this from a liability perspective. My view is that this practice would not require the retailer to take on the organiser liabilities, however, some guidance on this subject would have been welcome.
Linked Travel Arrangements
Linked Travel Arrangements (LTAs) continue to be an enigma. There is an entire section dedicated to these non-packages but it offers very little guidance in practical terms. For example, the Guidance states that LTAs “constitute an alternative business model that often competes closely with packages” (Para 68) – in my view this does nothing more than compound the belief that the make-up of these arrangements is confusing and subject to interpretation. How long will it be before we see this statement being used against the industry in a test case?
The Guidance provides that for an LTA to exist, there must be a “clear separation of the booking and selection processes” (Para 69). This in principle is fine but how does the seller of an LTA determine that clear separation exactly? If the traveller has pre-selected the services they want, this would be a package and not an LTA. But what if the travellers don’t communicate that pre-selection to the organiser or retailer in question? If the traveller then suffers an injury during their trip, I am sure the issue of pre-selection and what the traveller believed they were buying (despite the necessary caveats being provided) would soon be in the spotlight.
In paragraph 81 of the Guidance, there is a reference to the amendment of the mandatory standard forms to be provided when selling an LTA if the LTA “does not align with any of the forms” set out in the Annexes to the Regulations. It begs the question as to how an LTA can be sold that does not align with the formats laid down in the Regulations.
I have opined on many occasions as to the wisdom of implementing LTAs but they are here to stay. When faced with the lack of guidance, it is possible that LTAs will morph into an entirely new phenomenon as a result of the inevitable cases that will eventually go through our courts and shed their own interpretative light on this issue. It’s unfortunate that the Guidance which should have been the roadmap to compliance, will not assist the courts when making these interpretations.
Some other missed opportunities in the Guidance include:
The above points simply highlight the ambiguity of some of the new areas that continue to create debate within the industry. The Guidance was an opportunity for the Government to help the industry develop a set of best practice approaches when booking packages and LTAs in order to take the pain away from the consumer entirely.
Until that sort of guidance is delivered, I fear we may end up with another EC261 flight delay compensation scenario where the Regulation has effectively been re-written by the courts in an attempt to provide consumer clarity. Over time, the defences available to airlines have diminished considerably. Let’s hope the same fate does not beset the travel industry with the new PTRs.