31 May

Package Travel Regulations – working within the new definitions

The following article was written by Joanna Kolatsis, Partner, Head of Aviation and Travel, Hill Dickinson LLP for Travel Law Today, 5th Edition which can be read here.

The summer is almost upon us which, along with the sun, brings the long awaited Package Travel and Linked Travel Arrangements Regulations 2018 (PTR2) on 1 July.

Following delay by the UK Government, we have finally had the draft PTR2 handed down. While this does not mean an end to the ambiguity surrounding the practical implications of PTR2 and financial protection, we do now have a set of definitions to prepare for.

The key changes will centre on the business models you operate. While tour operators and traditional package organisers face changes, the most significant shake-up of the regulations is reserved for agents/retailers who may be organisers for the first time.

The new definitions give rise to challenges for travel agents, OTAs and travel service providers that will inevitably affect the way in which they operate and contract with other suppliers. PTR2 has also ‘gifted’ us the concept of a Linked Travel Arrangement (LTA), which has created much debate about what it is and who will be responsible for enforcement.

New definitions within the PTR2 include the following:

  • Travel service
  • Package
  • Linked travel arrangement
  • Traveller
  • Trader
  • Organiser
  • Retailer. 

For package organisers

If you are already a package operator, while there are changes to consider, they should not have a significant impact on the way in which you sell your products. You will already be familiar with your obligations and liability exposure as an organiser. Flight-plus arrangers and OTAs however will have to familiarise themselves with a number of changes as ‘new’ package organisers (rather than LTA providers).

The most significant changes package organisers will encounter in line with the new definitions are:

The provision of pre-contractual information

Information must be provided to the consumer including the suitability of the trip for persons with reduced mobility, the language in which tourist services will be delivered, information about cancellation options before the start of the package and about compulsory or optional insurance including for costs of assistance and repatriation in the event of accident, illness or death.

Content of the package contract and documents to be supplied pre-travel

Specifics about the package must be documented including details of the organiser, liability for proper performance of the services and the obligation to provide assistance. Details about insolvency protection, complaint handling and alternative dispute resolution must be provided. However, the traveller must “communicate any lack of conformity” during the performance of the package.

Transfer of the package contract to another traveller

A controversial change allows travellers to transfer the holiday to another traveller up to seven days before departure. Any applicable costs should not exceed the actual cost incurred by the organiser.

There are further obligations laid down in the PTR2 for organisers: details regarding alteration of the package contract terms; termination of the contract and the right of withdrawal before the start of the contract; responsibility for the performance of the package; and liability for booking errors.

Traditional package organisers will undoubtedly implement the extension of the package travel regulatory regime with limited disruption. For businesses falling newly within the new regime, it will signify a sea change in operational processes.

For traders (including retailers)

New to PTR2 is the introduction of the term ‘trader’. This opens up the PTR2 to a variety of business models and extends the supply chain to include travel service providers. Organisers fall within the definition of a trader but this is now an expanded term to include agents and anyone providing LTAs.

This also means extended liability under the PTR2:

  • Traders must state whether they are offering a package or LTA and the corresponding level of insolvency protection
  • In the case of an LTA, the trader must advise the traveller that an LTA is not a package and inform them of their rights. 

All traders will therefore need to decide which model they will be operating under: organiser, LTA provider or retailer. Regardless of which route is chosen (and some businesses may operate a number of models), compliance with the regulations and clear communication to customers about the role you play in each scenario will be imperative. While package organisers will remain primarily liable, there is scope to draw other traders into claims where they are deemed to have played a role in organising the services provided.

For LTA providers

The advent of the LTA is perhaps the most controversial invention of the PTR2.

To come within the parameters of this new type of travel arrangement, the services must be separately selected and paid for. This can be at one point of sale or where an additional service is offered in a targeted manner by another trader and booked within 24 hours of the first service.

Note: If the customer’s name, email and payment information is transferred to the other trader, this will lead to the creation of a package.

While not having the same liability as package organisers, LTA providers will have to provide insolvency protection to ensure that travellers are not out of pocket or stranded if they fail.

Working with the new definitions

The traveller’s perspective – clarity to travellers about their arrangements will be key. Consumers should be under no illusion as to the services you are providing, in what capacity you are providing them and what you are/are not responsible for in the event that something goes wrong.

The liability perspective – traders can be drawn into claims if they are found to have participated in organising the travel arrangements. Defining the relationships within the supply chain will be vital. If you are planning to sell as an LTA provider, adherence to the criteria defining the parameters of an LTA will be critical.

The contract perspective – in order to ensure that roles are clearly defined, not only to consumers but also between service providers, clear contractual terms will be of paramount importance. Indemnities and assurances of assistance in the event of claims will be a key contract feature given the expanded roles and liabilities that may be invoked.