It is fair to say that the COVID-19 pandemic has exposed a number of ‘grey areas’ when it comes to interpreting the Package Travel Regulations 2018 (the PTR’s) and, with the large volume of holiday cancellations since March 2020, it is only a matter of time before we start to see more and more ‘test cases’ hit the courts to obtain clarity on these ‘grey areas’. In this article, our Senior Associate, Nick Parkinson explores 8 legal issues that courts in the UK and EU may well be grappling with over the next 12 months!
Premature Cancellations: The Flicker of Hope!
Travellers are entitled to cancel a package and receive a full refund under Reg 12(7) of the PTR’s if there are ‘unavoidable and extraordinary circumstances’ (‘UEC’s) at the place of destination. However, the PTR’s are silent as to when exactly the customer is entitled to do so. Must they wait until the departure is imminent, i.e. once there is no longer a ‘flicker of hope’ that the holiday can proceed without being ‘significantly affected’? That view is supported by case law, and is the view taken by both Travlaw and the travel industry at large, including trade associations such as ABTA and ABTOT. Inevitably, however, some consumers and their representatives continue to argue otherwise. Only time will tell what approach the courts will take when determining these issues.
Will FCDO advice ever / always amount to a right to cancel?
The PTR’s make absolutely no reference to advice from the Foreign, Commonwealth & Development Office (FCDO) or equivalent, yet it is typically argued by consumers that this will amount to UEC’s at the place of destination, thus triggering a right to a full refund under Reg 12(7) of the Regulations. However, is that correct? In most ‘ordinary cases’, yes, it ‘probably’ will – but we are not convinced that is always going to the case. For example:
- What if a customer cancels a trip on a Monday when the FCDO is due to be lifted on the Tuesday? Surely it would be a nonsense to say that a holiday is ‘significantly affected’ at 11:59 pm, but magically becomes safe when the clock strikes 12:00?
- What if the FCDO advise against ‘all but essential travel’ to say France, but are the only government to do so? Is the FCDO to be assumed the world leading authority on such issues even if there were no other government authorities aligned with that advice?
- What if the traveller is departing from the USA and the advice from the US authorities does not align with the advice of the FCDO?
- What if there is no evidence (e.g. based on infection rates etc) to suggest that the threat of COVID-19 at the holiday destination is any higher than it is at the travellers place of residence?
Historically, it has usually been safe to assume that there are UEC’s at the place of destination where the FCDO advise against ‘all but essential travel’. This is because, until recent times, the FCDO would typically issue such advice when there are natural disasters, civil unrest and the like – and such advice would inevitably be aligned by government authorities worldwide. When it comes to the COVID-19 pandemic, however, FCDO advice may not be the ‘go to benchmark’ that once was! Careful consideration of ‘all of the circumstances’ is therefore required in order to determine whether or not a right to cancel with a full refund arises under Reg 12(7) – and FCDO advice is only ‘one piece of that jigsaw’.
Restrictions on Returning to the UK (DfT Restrictions)
Since travel resumed after the initial period of lockdowns, travellers have faced a long period of confusion as the government have moved from ‘travel corridors’ to a ‘Red, Amber, Green’ traffic light system to a ‘Red or Green’ system. During that time, the Department for Transport (DfT) has issued restrictions on travellers returning to the UK such as the need to quarantine, or take one or more PCR tests before and/or after returning to the UK. To confuse matters, the FCDO advice against ‘all but essential travel’ does not always align with the advice from the DfT!
So can restrictions imposed by the DfT trigger a right to a refund under Reg 12(7) where the FCDO do not advice against ‘all but essential travel’ to the holiday destination? Here at Travlaw, we have always been clear that we do not believe it can, that FCDO advice ought to prevail in this scenario. Of course, as above, it cannot be assumed that the FCDO advice will necessarily trigger the right to a refund either!
Packages where transport is not included
Once again, we are looking at possible claims under Reg 12(7). Customers can cancel, with a full refund, if there are UEC’s occurring at the place of destination or its immediate vicinity and which significantly affect—
(a) the performance of the package, or
(b) the carriage of passengers to the destination,
Any objective observer would naturally assume that point B only applies where the tour operator has provided transport to the destination. Alas, the Regulations do not specify whether that is the case. Equally, they do not say that point B applies to all packages – irrespective as to whether or not transport has been included in the package. The lack of clarity is obviously unhelpful and, as is often the case with these PTR issues, the legal arguments can get somewhat technical. Whatever the courts ultimately decide, clarity on these issues would be of great assistance to the travel industry.
Entry Requirements Due To Vaccination
Are customers entitled to a refund under Reg 12(7) if the country that they are visiting imposes entry requirements that require vaccinations that the traveller is unable to obtain prior to departure? Does it make a difference if those entry requirements only came to be after the booking was made? What is the position if the adult members of the family are able to enter the destination, but the children are unable to because of the UK governments reluctance to provide double vaccinations to children?
Historically, entry requirements for health formalities would always fall on the traveller. Furthermore, looking forwards, COVID-19 vaccinations may (dare we say it) end up being the ‘new normal’ for years to come. Looking at the objective of the PTR’s, can such requirements therefore really be said to be ‘extraordinary’ when these travel restrictions are now (sadly) becoming a part of everyday life? Looking at the strict wording of the PTR’s: do such requirements actually affect safe ‘carriage to the destination’ or ‘performance of the services’? The travel industry remains dubious that such claims would stand up in court but, inevitably, some consumers will try to push the boundaries of the Regulations.
‘Minor Changes’ To The Package Travel Contract
Here we are able to reference a recent court decision in the matter of Kirk -v- We Love Holidays which has certainly baffled the legal think tank at Travlaw. In that case, the Judge allowed a refund to a customer that cancelled shortly before the departure date because the original hotel under the contract was closed. The Judge decided that this amounted to a valid claim under Reg 12(7) on the basis that the package was ‘significantly affected’ due to the hotel closure. This is a highly contentious decision, not least because the tour operator was able to offer a ‘like for like hotel’ in the same area – and the fact they were able to do so was not challenged by the Claimant or the Judge.
The travel industry has always understood that such claims actually fall under Reg 11, and have no place under Reg 12 at all. Further, that the correct legal test to be applied is whether the ‘change of hotel’ constitutes a ‘significant change’, or whether it is a ‘minor change’. If it is a significant change, then the tour operator would need the traveller to agree to the alternative hotel (failing which they can cancel with a full refund). However, there is no obligation for a tour operator to obtain agreement from travellers when they are making ‘minor’ or ‘insignificant changes’.
Can the travel services be ‘significantly affected’ even if the tour operator is able to offer a ‘like for like hotel’ that would be considered a ‘minor’ or ‘insignificant change’ for the purpose of Reg 11?
Ironically, this claim has brought confusion to the travel industry on a point that nobody thought required clarity to start with! On the positive side, this claim is subject to an ongoing appeal and will hopefully be overturned!
Reason For Cancellation
I’m not done with Reg 12(7) yet! Another mystery to resolve, when making claims under Reg 12(7), is whether a consumer needs to establish a ‘casual link’ between, a) the reason for their decision to cancel the package, and b) any UEC’s at the place of destination. Let’s say a consumer tests positive for COVID-19 the day before departing to Spain, needs to self-isolate and cancels the package holiday. Simple right? In the case of illness preventing travel, the consumer is not entitled to a refund from the tour operator and would be directed to claim against their travel insurer. However, what if the FCDO were advising against ‘all but essential travel’ to Spain at the time of cancellation? A Judge could potentially determine (rightly or wrongly) that such FCDO advice amounts to UEC’s under Reg 12(7) and, if so, the consumer could then simply argue “there were UEC’s at the destination when I cancelled, therefore Reg 12(7) entitles me to a refund”. The point here is that Reg 12(7) does not state whether the presence of UEC’s at the destination actually need to have affected the consumer’s decision to cancel. The wording of Reg 12(7) neither, a) states that this is a requirement (although one would naturally assume it is), or b) confirm that the right to a refund exists irrespective as to the actual reason(s) for cancellation.
This leaves us with somewhat of a muddle. If the consumer is entitled to a refund in this situation, a consumer that suddenly falls ill could then conveniently appropriate FCDO advice (or other UEC’s) in order to obtain a full refund – even if that consumer had otherwise fully intended to travel against that FCDO advice (it is ‘guidance only’ after all). If the consumer is not entitled to a refund, however, that begs a range of other questions. For example, what if there are multiple reasons that influenced the decision to cancel? Must the consumer show that they would ‘more likely than not’ have travelled ‘but for the presence of those UEC’s’? Only time will tell how the courts will approach these issues.
Calculating Refunds for Curtailed Trips: Reg 15
In some circumstances, tour operators are obliged to issue a partial refund (a ‘price reduction’) to the traveller where the tour has started, but where the tour operator becomes unable to offer a significant proportion of the travel services. It may, for example, be that the holiday is cancelled 4 days in to a 7 day holiday. Needless to say, the PTR’s are not overly helpful when it comes to guiding either the travel industry, or consumers, on how to calculate such ‘price reductions’ – simply that it must be an ‘appropriate price reduction’.
So how does one go about calculating such a claim? Should the tour operator simply divide the total cost of the holiday by the number of days ‘lost’? Should the tour operator calculate the difference between the cost of services ‘lost’ – noting that the costs of the trip could be skewed towards either the start or the end of the trip? Or should the approach not be so forensic at all, for the courts to instead look at what enjoyment the Claimant got out of the holiday prior to cancellation vis-à-vis what enjoyment, highlights etc they missed out on?
CLARITY NEEDED FROM THE COURTS
The common theme in all of the scenarios above is that there is a real need for clarity and certainty in the travel industry right now. Without such clarity, it becomes a somewhat arduous task for tour operators to plan ahead during these uncertain times. Tour operators could potentially be paying out to consumers on claims when they do not need to, either because they are not armed with the right legal advice, or having made a commercial decision to avoid the time, cost and risk involved with litigation. On the flip side of the coin, tour operators may need to set higher reserves aside for refunds if the courts take us all by surprise and side with the consumers on any of the points above. Much needed clarity is needed from courts, BEIS or the EU Commission.
If you need advice on any of the issues discussed in this article, feel free to get in touch with the author.
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This article was originally published on: 14 December 2021