What might BEIS propose and how will it affect your business?
The following article appears in ABTA's latest issue of Travel Law Today.
Debbie Venn, Partner – DMH Stallard LLP
The Package Travel and Linked Travel Arrangements Regulations 2018 (PTR) were designed to provide a high level of consumer protection. Originating from the EU Package Travel Directive (PTD), the PTR remain part of English law. The EU Commission is currently reviewing the PTD and although since Brexit the UK would not be required to implement any changes that the EU Commission implements, the UK may be persuaded to make some changes to the PTR if it agrees with any amendments made to the PTD.
The Department for Business Environment Innovation and Skills (BEIS) launched a review this year to look at, and invite input from stakeholders on, the current PTR, with a particular focus on:
- The scope of a package
- Insolvency protection
- Cancellation and refunds
- Enforcement and understanding
Feedback has been reviewed following a series of workshops with stakeholders, although we are waiting to hear what proposals BEIS may put forward.
What areas of the PTR is BEIS looking at?
One of the main topics raised at the stakeholder workshops was the list of services comprising a package, and whether these are the correct ones. Under the PTR, a package combines two or more travel services, combined for the purposes of the sametrip. ‘Travel services’ could include (i) transport; (ii) accommodation; (iii) motor vehicle hire; and (iv) other tourist services (which are not intrinsically part of the carriage of passengers, accommodation or motor vehicle hire) where this is a significant part of the holiday either because of its value or because it is an essential part of the trip.
If ‘another tourist service’ is only combined with one of transport, accommodation, or motor hire services, then a package or Linked Travel Arrangement (LTA) is only created if the ‘other tourist service’ is (i) advertised as an essential feature; or (ii) accounts for a significant proportion of the value of the combination.
Some would prefer to make travel a mandatory element. Others feel this would create a disparity in consumer protection, particularly as some international packages do not include transport and these would likely need to still be protected.
Assessing whether a service is a significant part based on value is difficult, particularly given how travel ticket prices across high/low season change and focusing on the ‘essential’ reason for the trip could be more important, ie, was a part of the trip the reason that a customer booked a holiday. This will depend on how the arrangements were sold. For example, if it is a golf holiday and the customer is travelling to play golf, then the golf element would be a significant part. A sailing trip would be the same; if a customer chartered a boat then this would not be a package in itself, but if you added a skipper, then this would be a package as the skipper would be a significant part as the customer could not sail otherwise.
The ‘super package’, or package plus
Another area to consider is the ‘super package’, where a trader takes an original package and adds another element for a customer and sells that together. Technically, the PTR do not allow for a new package to be made where an existing package provided by one provider is mixed with another element by a different provider. This is because the original package is not ‘other tourist services’; a package is a product that is distinct from the carriage of passengers, accommodation and car hire and it is therefore unlikely that a package holiday itself can be classed as a travel service.
In these instances, who is responsible if problems arise with the trip? Potentially, the agent, but this is quite disproportionate as it would place the agent (who will no doubt have sold the original package as agent on behalf of the original organiser) under additional responsibilities and, if it does create another package, significantly increased potential liabilities and financial protection obligations. It is therefore important to assess where the consumer detriment is and how best to protect the customer, so that the gap is closed in any revised PTR, by confirming either that such arrangements fall inside or outside the definition of a package.
Linked Travel Arrangements (LTA)
An LTA is where a trader facilitates the combination of travel services, but the combination does not create a package. The BEIS review will consider whether LTA are too confusing and whether they should be scrapped or brought into the definition of a package. One popular option could be to strip out ATOL and flights and just have LTA for accommodation only or acccommodation and other tourist services.
There are currently different routes to how a package provider can provide insolvency protection: bond, insurance, or through an independent trust account. It is acknowledged that having multiple routes for providing insolvency protection to comply with the PTR is a good thing, however, fragmented protection can cause gaps and duplication, which is inefficient and can confuse consumers. The availability of bonding and insurance can also be problematic, as can the advantages of strong trust accounts versus the disadvantages to business cash flow. This needs to be explored further.
Cancellations and refunds
Some consider that the PTR stood up fairly well during the pandemic for dealing with cancellations and refunds. However, this highlighted issues in the supply chain, mainly where organisers struggled to get money back from suppliers.
The pandemic highlighted the concern around refund timings: the PTR require refunds to be made within 14 days, but in light of the problems getting monies back from suppliers, some stakeholders feel this should be extended. One suggestion has been to build flexibility into the PTR to deal with specific circumstances (such as a pandemic), although it is generally agreed that a single point of refund for consumers helps keep things clear and helps combat fraudulent claims.
Enforcement and understanding
Generally, industry and public bodies consider the PTR to be too complex and that consumers find them difficult to understand. The PTR schedules of information could be simplified, with better guidance on when and how often information should be given to consumers.
PTD review at EU level
The EU Commission has published an evaluation roadmap and impact assessment for the PTD. Although this does not affect the UK and the enforceability of the PTR in the UK, it will be instructive to know what is happening in Europe on this subject.
The evaluation and impact assessment will assess whether the PTD is achieving its aims, ie, the proper functioning of the internal market and robust and comprehensive consumer protection, in all circumstances (including during disruptions such as the COVID-19 pandemic), which may lead to a revision of the PTD.
This could include amendments relating to refunds for travellers, insolvency protection, use of vouchers, refund rights of organisers vis-a-vis travel service providers or in relation to certain concepts, such as LTA.
The findings of the evaluation will feed into an impact assessment, which is likely to start in spring 2022. From this, there may be proposals to amend the PTD to tackle gaps, with policy options to be assessed.
The COVID-19 pandemic was the first real challenge to the PTR on such an industry-wide scale and it has certainly raised issues about what level of consumer protection is in place and how this can be improved. Communications with consumers certainly highlighted customer confusion on areas such as whether they had booked a package, what insolvency protection was in place and how they could cancel, postpone trips or get their money back. We eagerly await the outcome of the BEIS review and discussions, to see what proposals might be put forward to bring clarity for consumers and a more even playing field for the industry.