Gary Noakes takes a look at the new Package Travel Regulations that come into force this month and explains what they mean for the industry.
As if agents and operators did not have enough to do with the peak season approaching, July 1 sees the new Package Travel Regulations (PTR) come into force.
Businesses can be forgiven for not having fully prepared, because the new regulations were only published by the UK government in late April. The Department for Business, Energy and Industrial Strategy (BEIS), preoccupied by Brexit, released the legislation almost four months after it was required by the European Union, leaving the industry scrambling to conform.
These are the first changes to the rules since the pre-internet days of 1992, which shows just how much of a rejig was needed. Broadly speaking, more holidays will become packages – meaning more consumers will benefit from legal and financial protection, and more travel companies will become liable. Although its worth noting that ABTA believes as many as half of travel arrangements will still not have any protection at all. This is because while the 1992 regulations offered only one definition of a package (a pre-arranged combination of at least two components comprising transport, accommodation or other significant tourist service offered at an inclusive price), under PTR 2018 there are six definitions, plus something known as a Linked Travel Arrangement, or LTA.
The original definition remains in place, while a new second definition extends package components to include car hire, bringing fly-drives firmly into the new rules. Another covers airline and OTA sales by making a package something bought from a single point of sale within the same booking process, regardless of whether the purchaser has separate contracts with airlines, hotels and other providers.
The new PTRs also protect bookings made via click-through arrangements, where bookings are transferred to a second site when the first booking is made.
Rajeev Shaunak, head of travel and tourism at the specialist accountancy firm MHA MacIntyre Hudson, says the new definitions spell out legally what has always been there “in terms of the spirit of the law”, but grey areas have now been removed.
ABTA’s director of legal affairs, Simon Bunce, says the significant difference is that the way most agents will have offered dynamic packaging and Flight-Plus arrangements mean they are now classed as package organisers, and may need an Atol. The new rules also place more liability on organisers if things go wrong, with compensation payable, or an appropriate price reduction offered. This, Shaunak believes, will inevitably push up agents’ liability insurance premiums.
Companies offering an LTA will need to clearly communicate this to customers. If a customer pays for components of a trip separately, for example booking car hire via a link after visiting an agent to book accommodation, this constitutes an LTA – provided the additional transaction is within 24 hours. Retailers must protect the LTA payment that they take, but explain to customers via a document that this is not part of a package – even though it resembles one.
Bunce advises: “Make sure you understand the information requirements, because if you don’t you can end up with liability.” He adds: “Airlines, I suspect, will like the LTA model, where clients book a flight and are offered an upsell of accommodation.”
Another legal view is that LTAs will not see much use. Stephen Mason, senior partner with Stephen Mason Solicitors, said: “The new definition of ‘package’ is so wide, it doesn’t leave much room for LTAs at all.”
It looks confusing, and Shaunak agrees that “most things are now a package”. He warns that agents that previously made sure they were not a principal are going to get caught. “If it looks and feels like a package, it is effectively going to be a package,” he believes.
At the time of writing, the industry was awaiting the final BEIS guidance notes to give more clarity in mid-June – only a fortnight before implementation of the new regulations. Ultimately it will be left to the courts to decide how the rules are interpreted, but meanwhile, more confusion stems from how they will initially be enforced.
The Civil Aviation Authority has said it is not expecting compliance with the new rules straight away, saying it will take a “proportional and mentoring stance” and that companies will have until October 1 to get issues sorted.
But according to Bunce, “It’s fine as far as the Atol regulations, but PTR regulations come into force from July 1 and give customers rights against travel companies.”
He urges members to seek ABTA’s help, and advises: “Understand your business model and what you will be doing and put in place everything you need, particularly with LTAs.”
Hopefully the picture will become clearer over the next few months. Otherwise, it could be a long, hot summer.