Matt, Stephen and Nick Parkinson held a webinar follow up, ‘Hot Topics – The Package Travel Consultation edition’ linked to the below article, summarising the proposals, what they mean to the travel industry and specifically your travel business – recorded Wednesday 11th October 2023.
Today, 20th September 2023, saw the start of the long-awaited launch of the Department for Business & Trade (“DBT”) consultation on the Package Travel and Linked Travel Arrangements Regulations 2018. The Regulations have been with us for some 5 plus years now, and have been used and tested throughout notable industry events such as the failure of Thomas Cook and, of course, the Covid-19 pandemic.
Coded into the Regulations was a review mechanism which required the UK (and indeed the EU – remember this was a pre-Brexit piece of law) to launch a review into how it was working by mid 2023. In fact both the UK and EU are a bit late in terms of reporting back, although the EU is mid information gathering. The UK’s own process starts here – following the pattern of the ongoing ATOL consultation by starting with a (relatively short – 12 weeks) “Call For Evidence” which will be followed up by a more detailed consultation in the first part of 2024.
What follows is not just a list of what is being proposed, but in true Travlaw style a day-1 analysis – we know that is what our clients want and have come to expect from us, and we are more than happy to oblige!
Our initial take-away is that whilst there have been hints as to the potential types of changes we might see for around two years, the implication has always been that we would be looking at tweaks rather than wholesale transformation. What is proposed is maybe a bit further reaching than expected, as you will see!
- Linked Travel Arrangements – Let’s lead with perhaps the most talked about potential change – Linked Travel Arrangements are potentially on their way out as a concept, at least as they are right now. That is unlikely to ruffle any feathers as most companies did not facilitate them, and those that did will not see any obviously negative impact from their passing. Whilst not out-and-out unpopular, LTAs were always the quintessential round peg in a square hole and caused much scratching of heads from travel & leisure businesses, authorities and indeed consumers and their advisors. Whilst the suggestion that “no one ever creates LTAs!” is not true (Travlaw have advised many businesses down the years) the proposal to either remove, simplify or re-position as another definition of package could easily be chalked up as an all round win. Our initial concern here is that the proposals to simplify look, well, pretty complicated so that may not achieve the aim of reducing confusion!
There is a separate proposal for Information Provisions for LTAs which would by definition be contingent on the concept sticking around in some form, but in short that side of things does follow the “keep it simple” approach and at first glance would look sensible. The big question here is one first put forward by The Clash in 1981. We like to think that LTAs were exactly what they had in mind when they asked “Should I stay or should I go?”.
One point to bear in mind here is that without doubt (borne out by discussions ahead of the 2015 Directive) the concept of LTAs was not to start a new “industry” of a type of travel product to sell but rather as an anti-avoidance mechanism, so to speak, to shut off what was seen to be a potential loop hole and make sure package protection was in place. It feels like all this discussion may get us back to that opening up of a loop hole in the UK which surely is not the UK Government’s intention.
- Lower Price Packages Exemption – This is a new proposal not previously mentioned as an option and amounts to there being a price point below which packages would not have most, or all, of the PTR rules apply at all. Yes, you read that correctly. The aim here seems to be part of the wider stated aim to help reduce the cost of travel but is a novel way of achieving that aim to say the least! Without wanting to get into the political here, it does beg the kind of question along the lines of “If you can afford a £10,000.00 holiday you are protected, but if you can only afford a £500.00 holiday you stand to lose your money”. As mentioned, this is brand new – and we don’t consider we are going out on a limb by saying “This is going to be a point of discussion…”! We also note that one of the comments in this section effectively raises an issue bound to come up – what if the price of the package changes so as to take it above or below the threshold before or indeed after booking?
- Insolvency Protection – As mentioned, there is a much talked about consultation already going on with regards to ATOL protection for licensable flight packages, but that is only one part of the financial protection jigsaw. It makes no sense to us for the ATOL and PTR processes to be this separate, but that is what we have – although the proposal launched today does at least reference the ATOL piece. In any event, as has been the case since 1992, the package travel laws require financial protection in the form of either bonding, insurance or a trust account. Non flight packages amount to a significant percentage of overall sales, and post-Covid the market has picked up in terms of choice for travel businesses who need protection. In our view the expanded range of potential providers has been a good thing for our clients and has not been a source of consternation the same way that ATOL has been, albeit as we have talked about here at Travlaw many times it tends to be issues related to airlines specifically as opposed to financial protection for Organisers. Then there is the issue of the overlap of double protection offered by of credit card protection and chargebacks – which is specifically mentioned and tabled for the first time, albeit there is not an out and out question on it. Here is an opportunity for the industry to have some much needed input on this very important area.
In any event, there is quite a notable proposal here which is going to spark a lot of debate, we expect – specifically that there be an increased ability to “mix” forms of financial protection. Currently trusts can be supported by an insurance product, but the proposal would widen that so that bonding could also be brought into the mix as well. The general thrust here is that the Government are seeking was to find increased flexibility across the financial protection markets, which would likely be welcome – but in the final analysis it will all depend on “the market” being willing to provide products. There are plenty of industry experts in this area who will have views on this!;
- Other Tourist Services –The proposal is basically to remove reference to a “Significant proportion” from the definition of what is an ‘other tourist service’, seemingly to shift the relevant test away from pure price value towards whether the service is an “essential feature” or not. Whilst there is an argument that this was a “doesn’t need fixing” situation, the proposal does seem to make things somewhat simpler, which seems sensible.
- Non-Travel UK Packages – One of the long standing rumours in this area has been that there may be provision to seek what would amount to an exemption to package travel rules to UK based companies providing travel services in the UK that does not include a travel element. So, for instance, a company providing 1) Hotel + 2) Golf Services would not amount to a package. Well, that is rumour no more as that is exactly what seems to be the plan here, including an option to completely remove “domestic packages” from the Regulations even if they do include travel. To a degree this will either affect businesses or it won’t – those businesses with that kind of model may see this as a “no brainer”, and it does seem to fit the aim of having a “Brexit Dividend” from a UK Government point of view. The big question here is whether or not this proposal is meant to apply to “Brits only” or all such packages provided in the UK? If the latter, is there a potential; “law of unintended consequences” here? I.e. if given a choice would an EU school decide that a non-travel UK package is unattractive given the lack of protection for their students, and so they go elsewhere in Europe? In reality, a UK inbound company offering a UK trip to French students for example would still have to offer protection under the French implementation of the Directive. Again, expect the debate to run and run on this one!
- Information Schedules – The gist of the changes here surround making the accessibility and understanding of information schedules more consumer friendly. In principal we don’t see that any travel business will object to that as long as it remains equally sensible in terms of any changes to what the industry needs to do. Let’s be fair, as important as Information Schedules are, it rarely comes up as an issue because the industry is so good at what it does – it should, and does, all come as standard. There are always some tricky elements to this such as out of date range flights and how they are dealt with, so something to address that would be welcome.
Otherwise, the ability to sensibly update the schedules electronically, from time to time seems like a move no one would object to, as long as the process is well thought out. - Changes To Business Travel? This is a more than interesting point to our many business travel clients. The stated aim here is to change the definition of traveller to specifically exclude business travellers and so remove the need for identification based on a General Agreement. Again, this feels like it was a “not broken, doesn’t need fixing” situation, but on the other hand this also seems like one of the areas where the Government is genuinely saying “We want your views on this”. If the exemption to the PTR stays in place then it may not be a notable change for business travel, but TMCs and travel buyers will want to stay tuned to this aspect of the wider Package Travel Consultation;
- Redress From Third Parties – Where to start here…? On the one hand, this is the Government finally arriving at the “party”. That is, recognising there are arguments over difficulties Organisers meet in obtaining redress from the suppliers that they end up being responsible for. That is overdue. There is no ultimate proposal here – again it feels like a genuine “tell us more about your concerns” situation, which means a lot of businesses and associations will have to patiently re-phrase what they have been saying for years. Certainly in our view this is an area that could bring benefits and clarity for all involved.
- Covid 19 Feedback – There was some doubt as to whether Covid thinking would make it into this process, but we are pleased to see it has. The whole issue of the “14 day refund” piece is addressed albeit the question is simply phrased around whether there should be a mechanism to extend the 14 days for extenuating circumstances in the future. Few, if any, travel businesses are saying “no” to that but here is the opportunity to feedback on your experiences of The Pandemic;
- Territorial Restriction On Insurance – Earlier we mentioned the “law of unintended consequences” and that concept rears its head here. Following Brexit, when the PTR was amended to say “UK” instead of “EU” at all mentioned, it had the knock on effect of meaning that UK Organisers could only use financial protection provided by authorised UK insurers. That has restricted so many of our clients and been a source of frustration, so finding a way to open up the markets here would appear to be only a good thing. However, again, will the insurance markets have and want the products available and at competitive prices?
Summary / Final Thoughts
Overall our view here is that whilst the issues in today’s document could not be described as truly “landscape-changing” there are plenty of areas that could impact certain areas of the industry and some businesses more than most. There was no mention of the status of Foreign Commonwealth & Development Office (“FCDO”) advice on travel services, which comes up time and time again and could really do with some guidance. The suggestion in the press release from Business Minister Kevin Hollinrake MP includes wording that strongly alludes improving the situation around “Unforeseen circumstance” and “Significant disruption” so perhaps this is more in their minds than is currently apparent?
On the issue of guidance – if the DBT is really listening then they will have noted that what the industry (and consumers…) have really been crying out for is guidance on the issues that come up time and time again. In fairness to the DBT their guidance documents down the years have been pretty good in our view – we just need more on many elements, too numerous to list here but include points such as “What is ‘occasional’ for the purposes of the Regulation 3 exemption for charitable and non-profit trips?”.
Going back to the mention of the EU process which is now running concurrently – both the EU and UK have said they are talking to each other about potential changes to the package travel rules. That just makes sense. All politics aside it is hard to see how divergence is going to be good for either consumers or businesses.
Watch this space, and the usual Travlaw channels, for more information and analysis in coming weeks and months. In the meantime, if the lure of that enticing phrase “Call for evidence” is too much to resist you can see the Press Release and Package Travel Consultation Document itself below. You might want to look sooner rather than later as the window for feedback is only twelve weeks! (although don’t be surprised if that is extended!):
As always, please feel free to reach out to any of the Travlaw Team on Advice@Travlaw.co.uk, on 01132 580033 or through any of your usual contacts.
The Travlaw Team
This article was originally published on: 20 September 2023
