Can anyone name a Tour Operator that did not suffer financially as the result of cancelled flights, either during the pandemic, or more recently in light of airport disruption? Anyone? I didn’t think so. But why is it always the organiser that is left holding the baby when it comes to issuing resulting refunds, even when the cancellation was completely outside of their control? And is there any right to redress available to them to seek to claw back these sums from their suppliers where they have contributed to the cancellation?
The Responsibilities of a Package Organiser
In essence, once a package is booked, the organiser is responsible for performance of the travel services contained therein. If anything goes wrong, it is the organiser that will be the traveller’s first port of call, even if fault or blame ultimately lies with the travel service provider. The organiser could incur costs such as:
- Refunds for cancelled holidays
- Additional costs of ‘replacement flights’
- Additional accommodation costs
- Compensation for ‘loss of holiday enjoyment’
Now, it should be noted of course that travellers may be able to seek the right to redress and compensation from the airline directly. However, that does not take away any of the package organisers’ obligations to the traveller, even if the airline has ‘broken every rule in the book’! So can organisers take this up with the airline?
The Right to Claim Against Your Suppliers
The vast majority of organisers have agreements in place with their travel service providers so that, if something does go wrong, and the organiser is forced to refund the traveller, the contract provides an express right to recover these monies from the travel service provider.
Unfortunately, not all travel service providers will agree to sign up to such agreements, with the main offender being certain airlines. With their size and dominance in the industry, some airlines play only by their own rules and, if an organiser refuses to work with them for that reason, that is their loss – it’s either ‘their way or the high way’.
It is for this reason, that when there are mass cancellations of flights (as we have seen over recent weeks and months) and this results in the subsequent cancellation of entire package bookings, organisers are having to pay out refunds from their own pocket, and then having extreme difficulty in recovering these sums from the airline.
What Can Organisers Do?
The industry has continually highlighted the recurring issue of airlines failing to comply with their legal obligations and indeed, in the recent consultation on consumer aviation rights, the right for an organiser to make direct claims against airlines was one of the specific questions raised.
In the interim, however, there may be a more proactive step that organisers can take and that is by making a claim against the airline under Regulation 29 of the 2018 Regulations. That is precisely the course of action that is currently being taken by On The Beach in their claim against Ryanair.
The wording of Regulation 29 states that if an organiser (or retailer, as the case may be) finds itself either paying out compensation or providing a price reduction (refund) to a traveller, they can seek to recover these sums from any third party that contributed to the event that triggered compensation in the first place.
So, for example, if you have sold a package consisting of flights and accommodation, and the flights are cancelled by the airline at the eleventh hour; you may incur costs to provide the customer with replacement flights. Alternatively, you may be forced to cancel the package and offer a full refund. Either way, Regulation 29 suggests that you are able to recover those sums from the airline! A couple of points to note:
- In order to seek the right to redress from a third party, that third party has to have contributed to the event that triggered compensation, price reduction or other obligation. The third party does not need to have caused the triggering event, nor do they have to be the sole entity responsible for it, and
- Regulation 29 does not provide any limits as to what an organiser can recover from a third party. The claim does not therefore need to be limited to a refund of the airfare paid to the airline, but opens the door to the organiser claiming for any losses they have incurred because of the flight cancellation.
Organisers should also consider whether they could make a claim against the airline for ‘unjust enrichment’. The basis of such a claim would be that the airline has been paid for a service that they have not provided, and where it would be unfair for the airline to retain any monies for that service. Unlike claims under Regulation 29, unjust enrichment claims will be limited to the amount paid for the airfare.
What Can Travlaw do to Help?
If you believe you may be entitled to the right to redress from airlines because of any recent flight cancellations, or indeed from any other supplier, please contact Partner Krystene Bousfield, or any member of our litigation team.
Published 26th June 2022