Covid Impact on Travel
When historians review the devastation wrought upon the world by the COVID-19 Pandemic (Covid), its impact on travel law won’t be a priority topic, writes Senior Counsel Stephen Mason. But the truth is that almost everyone travels, for leisure or for necessity, and the Covid impact on travel was huge. It’s almost true to say that the world closed down. So, the question is: faced with that impact, did Travel Law prove fit for purpose in balancing fairly the rights of consumers and businesses? And if not, what changes are proposed – or should be?
Typical legal questions which arose from the moment travel was affected, early in 2020, included:
- What (if anything) was the legal effect of Government Travel Advisories (GTAs) on travel booking contracts?
- Are imposed Covid restrictions in resort a defence to any claim by the consumer for lack of conformity under Articles 13 and 14 of the EU Directive 2015/2302 on Package Travel and Linked Travel Arrangements (‘PTD’)
- When were consumers entitled to a refund of pre-payments they had made under travel contracts?
- How close to the departure date were consumers required to wait before their re- fund entitlement was triggered?
- Did it make a difference whether the Covid impact or Travel Restriction was in the consumer’s country of residence or the country of destination?
- Did it make a difference if the flights to and from the destination (or other means of transport) did actually operate notwithstanding any official Restrictions?
- Could organisers of travel packages insist on consumers accepting a Credit Note or Voucher instead of cash?
- Was any such Credit Note or Voucher financially protected if the package organiser became insolvent before redemption had occurred?
- And what about relationships within the travel industry (or ‘travel eco-system’ as the Commission called it)? Were package organisers entitled to a refund from airlines or hotels in circumstances where the organiser was legally obliged to make a refund to the consumer?
The background to these questions is an established custom whereby consumers pay travel providers, including package organisers, in advance for holidays and travel – often well in advance – and in turn package organisers commonly pay the actual travel service providers (airlines, ferries, hotels etc) in advance too.
Existing Relevant Legislation
In respect of airlines, the key legislation is EC Regulation 261/2004, often called the Denied Boarding Regulation. This provides a high level of consumer protection by way of reimbursement, re-routing and assistance where there is denied boarding of a flight, or it is cancelled or (in effect) delayed by more than 3 hours. However, such protection does not extend to a scenario where the flight does operate but the consumer is unable to catch it. (Such inability by the consumer might arise from travel restrictions, or simply from a desire not to travel to a destination where there is a high risk of catching Covid). Even where refunds were due, some airlines were accused of putting in place over-complex and time-consuming hurdles which consumers – or indeed package organisers – had to overcome to obtain the money due – for example unnecessary demands for paperwork, or requirements to call a telephone number which was almost never answered.
Package holidays are, put simplistically, a combination of at least 2 different types of travel service (carriage of passengers, accommodation, car hire or other significant or essential tourist services) when sold together. These are regulated pursuant to the PTD, in force for holidays or trips booked after 1st July 2018. Because that date was not long before the pandemic started, there was very little case law guidance
on the meaning or effect of the Directive to guide businesses or consumers during the pandemic itself. [Note: all UK legislation made in compliance with the PTD and under EC Regulation 261/2004 remains in force at present, so far as relevant to this article].
Relevant provisions of the PTD include:
Article 11 of the PTD
This deals with alterations to the package before departure and applies where the package organiser is constrained to make a significant change to one of the main characteristics of the travel services as listed in Art 5.1(a) of the PTD. In this event, the organiser must notify the consumer and (again, to simplify) offer to the consumer either to accept the change (with any impact on the price), accept an alternative, or to be paid a full refund of monies paid.
What are the ‘main characteristics’ of the travel services? Well, they include obvious items such as the destination, the period of stay, the means and categories of transport, meals included, and suitability for persons of reduced mobility; and as to the accommodation, its whereabouts, main features and tourist category (if applicable). A significant change to any of these, including such a change occasioned by the pandemic, entitles the consumer to a full refund, in the absence of any other acceptable remedy. But the ‘main characteristics’ notably do not include significant changes to health formalities of the country of destination. Such formalities must be explained to the consumer at the time of booking but there is no stated obligation to update that information as it changes between the booking and departure dates – and such changes were frequent during the pandemic.
Article 12.3 of the PTD
This entitles the package organiser to cancel the package and give the consumer a full refund if the organiser, before departure and without delay, notifies the consumer that it is prevented from performing the contract because of unavoidable and extraordinary circumstances (UECs). UECs are defined as ‘a situation beyond the control of [the organiser] the consequences of which could not have been avoided even if all reasonable measures had been taken’. UECs are therefore likely to include the pandemic in most scenarios where it made performance of the package untenable. It gives the organiser a simple, if expensive, way of bringing its obligations to an end, and prevents the consumer from insisting that the trip go ahead. Note that unforeseeability is not a part of the test for UECs. Events can be foreseeable but still be UECs. The pandemic was unforeseeable before it started but there probably came a point when that was no longer the case. That however is not relevant to the legal issues discussed here.
Article 12.2 of the PTD
This has been the most important provision in practice during the pandemic. It entitles the consumer to cancel a package holiday or trip before departure without paying cancellation charges (and therefore giving entitlement to a full refund) ‘in the event of [UECs] occurring at the place of destination or its immediate vicinity and significantly affecting the performance of the package, or which significantly affect the carriage of passengers to the destination’.
The test which the consumer must satisfy is cumulative. There must be UECs at the destination, AND they must affect the performance of the package (or carriage to the destination) AND that effect must be significant. This was a new right introduced by the PTD with effect from bookings made after 1 July 2018.
How long must a consumer wait before exercising his/her right to cancel? Months or weeks before departure it may be extremely difficult to satisfy the cumulative test set out in the previous paragraph. And the use of the present test in Art 12.2 (‘occurring’, ‘affecting’, ‘which affect’) may suggest an imminent departure. See the case law section below for how courts have approached this difficult issue.
Articles 11, 12.3 and 12.2 have these common features: firstly, where a right to a full refund is triggered, no further compensation (e.g. for loss of enjoyment or disappointment or wasted expenditure) is payable; secondly, the full refund must be paid within 14 days. This 14-day requirement underlaid many of the problems for the travel industry occasioned by Covid.
Article 17 requires package organisers to have in place financial protection so that all prepayments made by consumers are refunded to consumers should the organiser become insolvent (and it makes provision for repatriation for those already on holiday at the date of insolvency).
There is nothing in the PTD about the role or effect of Government Travel Advisories. Earlier drafts of the PTD did contain specific reference but this was omitted from the final text.
For holidays which are not packages, there is no equivalent legislation. The most common non-package scenario is ‘accommodation only’ e.g. villas, apartments, cottages, hotels etc sold without any other added travel service. The PTD does not apply, but of course the Consumer Rights Directive does, and national legislation reflecting it. So, during 2020 and early 2021, when the failure or inability of companies to comply with refund requirements in a timely manner was at its peak, the UK’s most powerful Regulator, the Competition and Markets Authority (CMA) used (slightly controversially) its powers under the UK Consumer Rights Act 2015 to enforce refunds against accommodation-only companies, as well as its much more obvious powers under Package Travel legislation against Package Organisers.
Relevant Case Authorities
It was not just travel, of course, which was impacted by the pandemic, but the courts were too, often being closed for periods, or open only to deal with emergency cases. This has hampered the development of judicial guidance around the unanswered questions which I listed above. However, slowly, cases are beginning to trickle through, albeit some are low level authorities.
First, I should mention a travel case which does not relate to Covid but is important in approaching all the listed issues. The case is X v Kuoni Travel;1 as stated, the facts of this case related to a sexual assault on a woman holidaying in Sri Lanka, not to Covid, but its importance for our purposes is this. The Courts stated that, in interpreting the PTD and national laws resulting from it, it was important to bear in mind that the PTD is a Consumer Protection measure. Accordingly, said the CJEU, the liabilities and obligations imposed by the PTD on package organisers should be interpreted broadly, whilst the exceptions to liability in the PTD should be interpreted strictly. The Supreme Court said that the CJEU approach meant this: that regard must be had to “the nature of the subject matter. A holiday is intended to be a pleasant and enjoyable experience. . . . [This] necessarily requires that the services include so much more than the actual mechanics of travel or the provision of a mattress and overhead cover for the night”.
There is a clear implication here for package organisers who argue that, if the flight is operating and the hotel is open at the destination, this means that there are no UECs “occurring at the place of destination or its immediate vicinity and significantly affecting the performance of the package” and that government travel advisories, or the prevalence of Covid at the destination, cannot justify a consumer cancellation under Article 12.2, see above. Kuoni shows that the purpose of the trip – pleasure, relaxation etc – can be taken into account in determining whether the package is significantly affected.
1 Case reference in the CJEU is C-578/19 decided on 18.3.2021, and in the UK Supreme Court  UKSC 34 decided on 30.7.2021.
Cases Before the CJEU
At the time of writing (January 2023) there has been only one case (see below) decided by the CJEU which directly addresses any of the Covid travel questions identified at the start of this article. A couple of promising references to the Court were, sadly for those seeking clarification, withdrawn from the Court before resolution.
However, there are still some interesting cases pending;
One such is Austrian case C-414/22, for which the reference is as follows:
Must Article 12(2) of Directive (EU) 2015/2302 1 be interpreted as meaning that the traveller – irrespective of the time of his or her declaration of termination – is in any event entitled to terminate a package free of charge if the unavoidable and extraordinary circumstances significantly affecting the package did in fact occur at the time of the (scheduled) start of the package?
Must Article 12(2) of Directive 2015/2302 be interpreted as meaning that the traveller is already entitled to terminate a package free of charge if the occurrence of unavoidable and extraordinary circumstances was to be expected at the time of the declaration of termination?
A second reference, also Austrian, is case C-546/22, as follows:
Is Article 12(3) of Directive (EU) 2015/2302 of the European Parliament and of the Council of 25 November 2015 on package travel and linked travel arrangements, to be interpreted as meaning that, for an organiser to rely on unavoidable and extraordinary circumstances preventing performance of a contract, it is sufficient that the authority authorised in the customer’s Member State to issue travel warnings has issued the highest-level warning for the destination country before the start of the proposed journey?
If the answer to Question 1 is in the affirmative:
Is Article 12(3) of Directive (EU) 2015/2302 to be interpreted as meaning that there are no unavoidable and extraordinary circumstances in a case where the traveller, who is aware of the travel warning and the uncertainty as to the subsequent development of the pandemic, has nevertheless stated that he wishes to proceed with the journey and that it would not have been impossible for the organiser to carry it out?
We will have to wait and see what the Court decides, but it is very useful that of these 2 cases, one addresses some issues arising from Article 12.2 (cancellation by the consumer) and the other addresses some issues from Article 12.3 (cancellation by the package organiser).
The one case in which the Court has delivered judgment is FTI Touristik.2 Two travellers bought a two-week package holiday in Gran Canaria beginning on 13 March 2020 from a German travel organiser. They subsequently requested a 70% price reduction on account of the restrictions that were imposed on that island on 15 March 2020, to fight the spread of the COVID-19 pandemic, and their early return. The beaches were closed and a curfew was put in place, with the result that the travellers were only permitted to leave their hotel room to eat. Access to the swimming pools and sunbeds was prohibited and the entertainment programme was discontinued. On 18 March 2020, the two travellers were informed that they should be ready to leave the island at any moment and, two days later, they had to return to Germany.
Taking the view that it could not be held liable for what constituted a ‘general life risk’, the organiser refused to grant them that price reduction. The two travellers then brought the matter before the German courts. The Regional Court, Munich I, hearing the matter on appeal, asked the Court of Justice to interpret the relevant Articles of the PTD, namely Article 14. That Article provides that the traveller is entitled to an
appropriate price reduction for any period during which there was lack of conformity, unless the organiser proves that the lack of conformity is attributable to the traveller.
By its judgment delivered on 12 January 2023, the Court stated that “a traveller is entitled to a reduction in the price of his or her package where a lack of conformity of the travel services included in the package is due to restrictions that have been imposed at the travel destination to fight the spread of an infectious disease, such as COVID-19. The cause of the lack of conformity of the travel services and, in particular, whether it is attributable to the organiser, is irrelevant, since the directive provides, with regard to entitlement to a price reduction, for strict liability on the part of the organiser. It is exempt from that liability only where the failure to perform or the improper performance of the travel services are attributable to the traveller, which is not the case here”. “Further, it did not matter that restrictions such as those at issue were also imposed in the traveller’s place of residence and in other countries due to the worldwide spread of COVID-19. In order for the price reduction to be appropriate, it must be assessed in the light of the services included in the package concerned and must correspond to the value of the services for which a lack of conformity has been found.”
The Court stated that the organiser’s obligations arising from the package travel contract include not only those explicitly stipulated in the contract, but also those linked to it as a result of the purpose of that contract. It would be for the Regional Court, Munich I, to assess, on the basis of the services that the organiser concerned had to provide, in accordance with the contract, whether, in particular, the closure of the swimming pools in the hotel concerned, the lack of an entertainment programme in that hotel or even the fact that it was not possible to access the beaches of Gran Canaria or to visit that island following the adoption of measures taken by the Spanish authorities, could constitute failures to perform or improper performances of that contract by that organiser. There are 3 points to note from this decision. Firstly, the Court emphasises again, as we saw in Kuoni (which the court expressly referred to) that the obligations on package organisers must be seen in the wider context of the purpose of the contract, namely a holiday. Secondly, it should be noted that this case is purely about price reductions. It is not about compensation (e.g. for loss of enjoyment), presumably because Article 14 provides that UECs are a defence to such claims, unlike in the case of price reductions. Thirdly, in practice the relevance of this case may be largely confined to cases where the consumer was actually in resort when restrictions were imposed. If the consumer had not yet departed, a refund claim under Article 12.2 would be the relevant route.
National UK Cases
Of course, many cases have been brought before national courts, although progress has often been slow because the operation of the courts themselves was prevented or reduced by the pandemic. I have chosen the following cases as being particularly illuminating re the questions posed at the start of this article:
Dennison v We Love Holidays Ltd3
This was an appeal hearing. This means (in a UK context) it is of ‘persuasive’ authority, rather than binding. The facts were that Mrs Dennison had booked a package holiday to Lanzarote. Her flights were operating and the hotel was open. At the time of travel, there was no government travel advice against travel to the Canary Islands. But on return to the UK, it was necessary for travellers to quarantine for 14 days. Accordingly, Mrs Dennison did not want to go on her holiday. She cancelled it and claimed a full refund pursuant to Art 12.2 (the UK equivalent – Regulation 12(7) of the Package Travel Regulations 2018 (PTRs) – is of course identical). Love Holidays refunded to her the hotel element of the package, which they themselves had received back from the hotel; but they did not refund the flight cost, as they had no refund from the airline, not least because the flight operated. At the original hearing, Mrs Dennison was successful and was awarded a full refund. Love Holidays appealed.
The Appeal Judge (Circuit Judge) decided as follows: the claimant had stated in her claim form that she terminated the contract because of the Government’s requirement to self-isolate for two weeks upon her return to England. Whilst cancellation for that reason may be understandable, that is not the issue for the court. The issue was whether the criteria in Regulation 12(7) of the 2018 Regulations apply – were there unavoidable and extraordinary circumstances occurring at the place of destination or its immediate vicinity and which significantly affected the performance of the package or the carriage of passengers to the destination? The evidence showed that all parts of the package were able to be performed and the flights went ahead. The performance of the package and the carriage of passengers to the destination was therefore not significantly affected. There was therefore no breach of the implied term in regulation 12(7) which enabled the claimant to terminate the package travel contract before the start of the package without paying any termination fee.
3October 2021 – Lincoln County Court
Kirk v We Love Holidays Ltd4
This was also an appeal hearing, so its status as an authority is identical to Dennison. The facts are similar too, with one key difference. The Kirks booked (before the pandemic) a package holiday to the Greek island of Kos. When the pandemic broke out, the hotel which they had booked as part of the package closed, apparently because of a lack of bookings as a result of the pandemic. Love Holidays offered a replacement hotel which, the parties and judge all agreed, was ‘like for like’ and only 4 minutes from the original hotel. But the Kirks cancelled their holiday and brought a court claim for a refund in which they said “We refused [the alternative] due to the pandemic”. Again, there were no Government travel advisories in respect of Kos, and again Love Holidays had refunded the hotel costs but not the flight. At the original trail the judge found that the “place of destination” referred to in Article 12.2 was the hotel, not the resort or island of Kos. He therefore concluded that, because that hotel was closed, the Article applied and entitled the consumers to cancel with a full refund.
On the Article 12.2 point, the appeal Judge decided as follows. There were 2 questions to consider: firstly, whether, in determining that the place of destination was specifically the Grecotel, the lower court was wrong in that regard; secondly, whether that court was also wrong in determining that the other aspects of Regulation 12(7) [Art 12.2] were made out.
These questions required consideration of whether for the purpose of Regulation 11 [Art 11] the change of one hotel to another was of significance such that they were entitled to cancel in any event.
The Appeal Judge noted that this claim occurred during the middle of a global pandemic, and that Mr and Mrs Kirk had genuine concerns about holidaying in the middle of a pandemic with their young family. However, she recognised that, unlike other parts of Greece, there was no advice from the Foreign and Commonwealth Office that at the relevant time people should not travel to Kos. Also, the flight that Mr and Mrs Kirk and their family were booked on with Jet 2 did in fact go, so they could have flown to Kos on the flight in question.
The Appeal Judge concluded that the lower court, in deciding that the place of destination was the Grecotel Kos, did not deal with the question of whether that hotel could properly be changed as part of the travel services and did not really address that matter with significant clarity. She decided that If the travel company is entitled to change hotels to those of a similar standard, which they were pursuant to the terms and conditions, then because the first hotel is then shut does not mean that Regulation 12(7) [Art 12.2] is engaged. Whilst a change in resort or a change in category might arguably amount to a significant change, that is not what Regulation 12(7) [Art 12.2] is meant to address.
She then turned to the argument under Regulation 11 [Art 11] whereby the Kirks said in effect, they were entitled to cancel because there was a significant change. As a reminder, that says: “The organiser must not unilaterally change the terms of the package travel contract before the start of the package other than price (which is not relevant for these purposes) unless (a) the contract allows the organiser to make such changes (b) the change is insignificant and (c) the organiser informs the traveller of the change in a clear, comprehensible and prominent manner on a durable medium.”
The Appeal Judge concluded that on the facts of this case what was offered was a change, but that for these purposes the change was insignificant. This was because the 2 hotels were like for like. That is a change which the travel company was entitled to make. She added that: “I have a lot of sympathy for Mr and Mrs Kirk. I understand it must have been a very difficult decision to cancel this holiday. But I have to apply the law as it stands not a law of sympathy.”
The Appeal Judge also referred to what is Art 5.1(a)(iii) – which is applied by Art 11 in determining whether there has been a significant change to the hotel – in support of her conclusion that this was not a significant change.
By contrast, there have been a number of first instance decisions where the existence of a Foreign Office travel advisory against ‘all but essential travel’ triggered an Article 12.2 right to a refund. An interesting variation was in Brynmawr International Foundation School v Holiday World Travel,5 where as well as advice against travel to the destination (USA) there was Education Department advice against schools undertaking foreign trips. The latter on its own would not fulfil the requirements to trigger Art 12.2, but the Defendant’s argument that this meant that the school would have had to cancel anyway and so the cancellation was not caused by Foreign Office advice (applying the ‘but for test’) was dismissed by the judge. If the school cancelled when it had grounds to trigger Art 12.2 that was enough, even if they also had other reasons to cancel which would not fulfil its requirements.
So it is clear from all the cases, whoever won, that package organisers who try to argue that, because the flight is going and the hotel is open, Art 12.2 is not triggered, are going to struggle in the face of a Government Travel Advisory against travel. And this is in line with the principles expressed in the Kuoni case.
4March 2022, Wrexham County Court
5January 2022, Cardiff County Court
The ‘flicker of hope’ test
It has been noted, from the wording of Art 12.2 set out above, that it is couched in the present tense. The circumstances in which a consumer may cancel and claim a full refund are where UECs are ‘occurring’ at the destination and ‘significantly affecting’ performance of the package or ‘significantly affect’ carriage to the destination. Indeed, Recital 31 to the PTD uses the phrase ‘will significantly affect’. But at the same time the Article requires that any such cancellation is made ‘before departure’.
This inevitably raises the question: when exactly is it appropriate for a consumer to cancel under this Article? In the context of Covid, which is our subject, it can be seen for example that to cancel a year before departure would be premature, as it would be impossible for the consumer to demonstrate that, as at that date, UECs are affecting performance of a package contract which is not due for 12 months. But on the other hand, it would surely be unreasonable to expect a consumer to wait until they are about to set off for the airport on the day of departure before being able to exercise their cancellation rights!
In the UK, there were cases arising out of a previous epidemic, namely SARS in 2003, in particular affecting holidays in Hong Kong and China. As we have seen, Article 12.2 was a new consumer right introduced only when the PTD came into effect in July 2018. So, these SARS cases were decided under the old 1990 PT Directive (90/314) and its equivalent to Article 12.3. When was the package organiser constrained to cancel a trip and provide a full refund?
In Lambert v Travelsphere  CLY 1977, the county court judge decided that the package organiser was not so constrained until there was ‘not a flicker of hope’ that the trip could safely proceed. Obviously, this suggests a very late date is appropriate for cancellation. That case was followed by various other cases heard since that date.
However, the test was reviewed in a more recent county court case, Sherman v Reader Offers Ltd.6 It concerned an Arctic cruise whose planned itinerary was at risk by the failure of the expected ice melt to develop.
The judge recited that the Defendant’s argument followed the Lambert reasoning. He said:
“In Lambert, the court held obiter that a tour operator cannot shut its eyes to an obvious danger so as to deny that it is constrained to alter an essential term, but it is permissible for it not to alter the term until there is not “a flicker of hope” that the contract can be performed in accordance with the original term. In order for a tour operator to be constrained to alter a term, it must be absolutely inevitable and unavoidable for it to be altered.
“In considering the submissions of the parties on this point, I have reminded myself of the decision of the Supreme Court in X v. Kuoni Travel Ltd (above), in which the Court stated that it had”… taken a broad view of the scope of obligations undertaken by an operator under a package travel contract”. In my judgment, the expression “a flicker of hope” does not constitute a formulated test for deciding whether a tour operator is constrained to alter an essential term of the contract and arguably would set the bar too low, having regard to the clear expression of policy in relation to the PTR set out by the Supreme Court in Kuoni.
Applying the “broad view” of the PTR as set out in Kuoni, in my judgment a tour operator is constrained to alter significantly an essential term of the contract if there is no longer a reasonable possibility that the contract can be performed in accordance with that essential term.”
On an appeal of this case to the High Court, this latter view as set out by the judge in Sherman was upheld, and now represents the law in the UK.7
As stated, neither of these cases is of high authority and neither trumps the other. A higher level of guidance is needed.
German courts have tended towards a different approach. Their approach has been that even if a consumer cancellation under 12.2 was premature, it could be justified after the event if in fact it transpired that performance of the package was (or would have been) significantly affected as at the departure date. So, consumers get ‘the benefit of hindsight’ in such cases.
It can be seen that the Austrian reference to the CJEU in DocLX, described above, is very important to bring hoped-for clarity to this difficult area of law.
6May 2022 – Winchester County Court.
7 EWHC 524.
Right To Redress
So far, we have only considered the relationship between the package organiser and the consumer. But as we shall see below, many of the problems in that relationship arose out of the fact that the package organiser normally does not itself supply the services (flights, hotels etc) but subcontracts those to (or acts merely as agent for) airlines, hoteliers etc; and has normally been required to hand over payment for those services to those suppliers before departure. What does the PTD say about that commercial relationship?
Art 22 is entitled ‘Right of Redress’ and simply says:
In cases where an organiser or, in accordance with the second subparagraph of Article 13(1) or Article 20, a retailer pays compensation, grants price reduction or meets the other obligations incumbent on him under this Directive, Member States shall ensure that the organiser or retailer has the right to seek redress from any third parties which contributed to the event triggering compensation, price reduction or other obligations.
Package organisers argue that, by its use of words such as ‘must ensure’ and ‘right’, this gives them an automatic right to recovery against a supplier e.g. an airline in circumstances where the package organiser has to refund the consumer, and the flight didn’t operate or was significantly altered (or e.g. the hotel was closed). Questions arise on this argument about cases where governments advise against travel but the flight still operates, or the hotel is still open; and whether if e.g. a flight is cancelled, and the organiser pays to the consumer a full refund, the right of redress applies to the price of the flight or the full package price.
By contrast, airlines and others argue that the only meaning to be attached to Art 22 is that if – by contract or otherwise – the organiser has a right of redress, then nothing in the PTD has the effect of negativing that right. But in turn, this sits uncomfortably with the words ‘must ensure’ and ‘right’.
It is fair to say that Article 22 received scant attention before Covid! But in the UK, there is some high-value litigation, arising out of the pandemic, in train against the airline Ryanair, which litigation relies in part on the UK transposition of Art 22, namely Regulation 29 PTRs. The issues are further complicated because (a) the wording of Regulation 29 is not quite the same as Art 22 and (b) there is uncertainty over how much regard the English court will have to the precise Directive wording following Brexit.
Proposals for Reform
The EU Commission was always slated to report on how the PTD was (or was not) working, but when it published its report in February 2021,8 a significant portion of it was devoted to whether the pandemic had exposed parts of the PTD as not fit for purpose or in need of reform.
The relevant points which they recommended for further consideration were:
- Insolvency protection (see Art 17, above) worked well, but payment out from the protected fund or bond or insurance was sometimes rather slow.
- Vouchers, or Credit Notes, (in place of cash refunds) can be allowed but only if acceptance by the consumer is voluntary – cash refund rights must be respected. Some Member States had gone too far during the pandemic in allowing vouchers to be compulsory.
- Covid demonstrates that it is against consumer interests if liquidity issues cause package organisers to fail (become insolvent).
- Failure by airlines and others to reimburse package organisers, when package organisers have themselves to refund consumers by virtue of Arts 11 and 12, “can result in an unfair sharing of the burden among companies in the travel eco-system”. Should there be parallel refund obligations?
- Should official Government travel warnings (against ‘all but essential travel’ or the like, in respect of a destination) be made formally into a ground which entitles consumers to a refund?
The Commission carried out a consultation of stakeholders on these issues. A Summary Report on the outcome was published by the Commission on 9th August 2022.9 we would highlight some key issues of relevance to this article.
These include the finding that packages are very popular because of their ease of booking and the financial and other protections afforded to packages by the PTD. Although many companies wanted the scope of the definition of ‘package’ reduced (e.g. by excluding packages consisting of hotel plus tourist services), consumers strongly supported the existing definition.
However there was widespread agreement that the rights we have discussed above, i.e. the cancellation rights (Art 11 where there are pre-departure significant changes; and Art 12, covering cancellation for UECs by the consumer as well as cancellation by package organisers) added up to a confusing picture. Further, most consumers want the PTD to add a provision specifying expressly the legal effect of Government travel advisories.
As to vouchers, many respondents to the consultation were happy for vouchers to be offered (where a package cannot go ahead) as long as acceptance is voluntary, the right to a cash refund is preserved, and the voucher is financially protected in the same way as the cancelled package was. [This is what happened in respect of vouchers – after a delay – in the UK and in some Member States, during Covid. In the UK strict conditions, e.g. re redemption dates, were imposed on the issue and terms of Refund Credit Notes, as they were called to distinguish them from ordinary vouchers, such as gift vouchers or compensation vouchers. Compliance with these conditions ensured they were protected by Financial Protection Schemes including the statutory ATOL Scheme].
Looking at the liquidity issues caused to package organisers by the pandemic, many thought package organisers should have a legally enshrined right to a refund from its supplier(s) where it was obliged by the PTD to refund the consumer (see discussion of Art 22 above). Consumers also wanted the law to stipulate a maximum 20% deposit payable, but industry respondents were against this unless airlines were under the same obligation.
Further consultation was suggested on transport only contracts and their protection.
The Covid-19 pandemic provided a major challenge to the travel industry and its consumers, not just at the practical level, but also in regard to travel law. It appears that we are only at the beginning of the process of answering most of the important questions raised at the beginning of this article.
This article was originally published in ERA Forum in June 2023.
This article was originally published on: 29 June 2023