An update on the legislative framework for package holidays
The package travel industry is going through unprecedented times, however, there may be some positive signs on the horizon. Travel is likely to return and, as Augustine of Hippo said, the world is a book and those who do not travel only read one page. Taking a long term view, it might be said that, in keeping with Augustine’s description of the world, people will continue to read as many pages as possible, because normally, holiday travel is a key event in most people's annual calendar. It is estimated that 9 in 10 people from the UK went on a holiday in 2019 and in the same year, outbound travel contributed £37.1Bn to the UK economy.
Holiday travel brings the possibility of dissatisfaction with a purchased holiday experience or holiday package and hence the desire to seek redress. While the United Kingdom has left the EU, The Package Travel and Linked Travel Arrangements Regulations 2018 (SI 2018/634) (‘the 2018 Regulations’) remains in force. In other words, despite the repeal of European Communities Act 1972 by the European Union (Withdrawal) Act 2018, section 1, the 2018 Regulations, being EU-derived domestic legislation, continues to have effect in domestic law during the implementation period (‘IP’), as it had effect in domestic law immediately before exit day. This is under the European Union (Withdrawal) Act 2018, section 1B, and will be, on and after IP completion day (currently listed as 31 December 2020), under section 2 of the 2018 Act.
Package holiday claims in a previous publication
In a previous publication (2003) titled ‘Holiday Compensation – Damages in Package Holiday and Travel Cases’, a general framework was set out on the basic principles for assessing holiday claims. Essentially, holiday claims are a breach of contract where one party has failed to meet its contractual obligations and therefore has to pay compensation to the other party. The publication set out the main headings under which compensation falls and the key principles that govern the quantification of compensation. These are captured in the package holiday claims assessment framework in figure 1 below.
Figure 1: Package holiday claims assessment framework
We now have a new regulation for package holidays
The previous publication was based on the Package Travel, Package Holidays and Package Tours Regulations of 1992 (SI 1992/3288) (‘the 1992 Regulations’). Since then there has been a number of changes in the world of package holiday travel. The Package Travel and Linked Travel Arrangements Regulations 2018 (SI 2018/634) came into force on 1.7.18 (the '2018 Regulations'). This Statutory Instrument implements the EU’s 2015 Package Travel Directive and replaces the 1992 Regulations.
Need for 2018 Regulations
As a result of the many advances in technology and the emergence of online holiday booking and indeed online travel agents, it was not entirely clear what fell within the scope of the 1992 Regulations. It was felt that an uneven regulatory environment existed where traditional package holiday organisers were subject to a level of regulation which many of their online competitors were not, although to the consumer they were providing, in essence, the same service. This resulted in confusion about the level of protection that travellers were entitled to receive.
One issue was the (narrow) definition of ‘package’ and the difficulty of discerning whether services sold were or were not a 'package', and so with the 1992 Regulations. In the case of R. (on the application of Association of British Travel Agents Ltd (ABTA)) v Civil Aviation Authority  EWCA Civ 1356;  2 All E.R. (Comm) 898, the meaning of when a holiday was ‘sold or offered for sale at an inclusive price’ was considered. Chadwick LJ said, at paragraph 31:
‘If the services are sold or offered for sale as components of a combination, there is a package: if they are sold or offered for sale separately but at the same time, there is no package. The question whether they are sold as components of a combination — or separately but at the same time — is a question of fact. That question may not be easy to resolve in the particular case.’
The 2018 Regulations now provide a much wider definition of ‘package’ and so catch a much wider set of services. Regulation 2(5) defines ‘package’ as:
‘...meaning a combination of at least two different types of travel services for the purpose of the same trip or holiday, if—
(a) those services are combined by one trader, including at the request of, or in accordance with, the selection of the traveller, before a single contract on all services is concluded; or
(b) those services are—
(i) purchased from a single point of sale and selected before the traveller agrees to pay,
(ii) offered, sold or charged at an inclusive or total price,
(iii) advertised or sold under the term "package" or under a similar term,
(iv) combined after the conclusion of a contract by which a trader entitles the traveller to choose among a selection of different types of travel services, or
(v) purchased from separate traders through linked online booking processes where(aa) the traveller's name, payment details and e-mail address are transmitted from the trader with whom the first contract is concluded to another trader or traders, and (bb) a contract with the latter trader or traders is concluded at the latest 24 hours after the confirmation of the booking of the first travel service, irrespective of whether the traveller concludes separate contracts with one or more travel service providers in respect of the services.’
Clearly much more will be caught within the scope of this definition. Just on ‘inclusive price’ - a narrowing definition under the 1992 Regulations - this has been replaced with Regulation 2(5)(b)(ii) providing for ‘...an inclusive or total price.’
The aims of the 2018 Regulations are well outlined
As stated, the aim of the 2018 Regulations was to broaden the definition of a package holiday to encompass new ways of purchasing package holidays online; to modernise consumer protection in the package travel sector. The architects of the 2018 Regulations aimed to level the regulatory landscape so that ‘dynamic package’ organisers were subject to the same level of regulation as traditional package organisers. Further, it was hoped that, by broadening the UK’s insolvency protection regime to cover sales across the EU, the 2018 Regulations would facilitate cross-border trade.
The regulatory changes introduced some novel concepts
(a) Dynamic packages
As we have noted, advances in technology in the travel industry have led to an increase in new forms of package holiday travel being purchased by travellers. Many of these arrangements have the features of a package holiday and in fact compete directly with traditional package holidays but may not fall within the scope of the 1992 Regulations. An example of this is one-trader packages which involve consumers being able to effectively customise the content of their holiday package according to their particular needs, on a website or at the office of a high street agent. Hence, their travel and other arrangements are put together by this one trader. Another example is Multi-trader packages which consumers can put together a holiday, by aggregating the components of a holiday package themselves, usually online. This is usually based on specific offers coming from more than one trader but assembled at a single point of sale. These packages may not have all the typical characteristics of a traditional package holiday.
(b) Linked travel arrangements (LTAs)
Interestingly, the 2018 Regulations also cover looser combinations of travel services. These are referred to as “linked travel arrangements” (LTAs). LTAs are in effect the combination of at least two different types of travel services purchased for the purpose of the same trip or holiday. However, unlike holiday packages, they involve the separate selection and payment for each travel service and separate contracts with the individual travel service providers. These transactions can be done for example, online, by phone, in person on the high street or through a combination of online and offline media.
In essence, an LTA is created when a trader facilitates either:
i) the selection of and payment for two or more services for the same trip, under separate contracts with individual providers, upon a single contact with a point of sale (LTA 'Type A'), or,
ii) the separate selection of and payment for two or more travel services for the same trip through targeted linked booking processes within 24 hours without transferring the consumer’s payment details. However, if the traveller’s payment details (e.g.name and email address) are transferred, the services would be considered to be a package (LTA 'Type B')
An example of an LTA Type A would be a traveller, purchasing a plane ticket (fully completing the selection, payment process, so the contract is concluded) then, without leaving (website/travel agents), being offered, selecting, and purchasing accommodation for the trip.
An example of an LTA Type B would be a traveller, completing the purchase of a flight. The airline then sending the traveller an email inviting him to book a hotel room, and the traveller so booking a hotel room offered, within 24 hours of the original flight ticket purchase.
To avoid an LTA arising from sequential bookings, there would need to be a clear separation of the booking and selection processes, i.e. one booking is fully concluded before the next service is selected.
To ensure travellers do not confuse an LTA for a package, Government guidance specifies that:
'Traders who facilitate LTAs are required to give clear information to travellers specifying that what they are buying is not a package and that only the individual service providers are responsible for the individual travel services. Traders must state this in a clear, comprehensible and prominent manner, along with details on the insolvency protection.'
(c) Mutual recognition requirement
The regulatory changes introduced a mutual recognition requirement amongst EU Member States. This means that, for example, the UK must accept the insolvency protection arrangements entered into by organisers established in another EU Member State, under the rules of the Member State where the organiser is based. Similarly, other Member States are required to accept the insolvency protection put in place by UK-based organisers. It is anticipated that this new provision will stimulate cross-border trade by enabling organisers to comply with just one insolvency regime of the Member State where they are established rather than what was previously the case where all parties had to comply with the insolvency regime of the place of sale.
Central contact points
The legislative changes require the establishment of Central Contact Points in each Member State to supervise organisers’ compliance with the new mutual recognition principle in different member states. The Central Contact Points can provide clarification on insolvency protection that organisers should have in place. In the UK the Civil Aviation Authority is designated as the Central Contact Point.
The 2018 Regulations require travellers to be provided with specified information relating to a package holiday and their rights (including the information on alternative dispute resolution), as well as the details of the package travel contract, before a contract is agreed (Part 2 of the 2018 Regulations). Additionally, there are restrictions to the changes that may be made to a package holiday travel contract once agreed and regulations around both parties’ termination rights (Part 3). The Regulations also give rights to price reductions and compensation in cases where the package travel contract is not complied with (Part 4).
The 2018 Regulations require organisers to put in place adequate security by way of insurance, bonding or monies in trust so that travellers can be refunded and, if necessary, repatriated if the organiser becomes insolvent (Part 5). Hence, in the event of the organiser's insolvency, such security must be able to cover the reasonably foreseeable costs of refunding all payments made by the traveller and, if the carriage of passengers is included in the package, of repatriating the traveller if necessary.
Part 5 of the 2018 Regulations require traders that facilitate LTAs to ensure that travellers benefit from insolvency protection covering the refund of payments received from the travellers and, if that trader is responsible for the carriage of passengers, the cost of repatriation. Moreover, the relevant trader must inform the traveller about that protection, and must also inform the traveller that s/he will not benefit from other rights that apply under the 2018 Regulations to package travel contracts.
Part 6 of the 2018 Regulations make general provision about the obligations of a retailer, where the organiser is established outside the European Economic Area. This Part also sets out the liability of the trader in respect of booking errors and the rights of an organiser to seek redress from a third party. The 2018 Regulations also prescribe the enforcement authorities for the 2018 Regulations, and sets out the due diligence defence and the prosecution time limit (Part 7).
Organisers responsibility for 3rd parties' performance
It continues to be the case that liability for the performance of the package holiday resides with the organiser irrespective of whether the services are performed by third parties (formerly under Reg.15 of 1992 Regulations). The package holidays can often include multiple services from various providers and a problem with the delivery of one service may affect the delivery of others. Therefore, making the organiser responsible for the whole package avoids the traveller having to deal with multiple parties in the event that something goes wrong.
The 2018 Regulations enables a better travel experience in an era of technology
In summary, the 2018 Regulations broaden the definition of a 'package' holiday to ensure that regulations apply to more modern methods of purchasing package holidays, with particular consideration for online purchases. It also recognises more dynamic types of connected holiday services and aggregated holiday experiences (LTVs), and introduces (limited) protection for travellers who purchase them. In addition, the 2018 Regulations seek to encourage intra EU cross border holiday sales, by limiting the insolvency protection a company must have to just that of its own country.
In essence, the 2018 Regulations builds upon the 1992 Regulations, widening their regulatory scope and extending some protection to looser connected services, while at the same time, bringing the regulatory framework up to date for the internet enabled world; a regulatory framework which will enable travellers to conveniently 'read' more pages from that world book Augustine of Hippo was referring to.
Further guidance can be found in ‘The Package Travel and Linked Travel Arrangements Regulations 2018 - Guidance for Businesses’, July 2018, issued by Department for Business, Energy & Industrial Strategy.
Reference can be made to Package Travel and Linked Travel Arrangements (Amendment) (EU Exit) Regulations 2018/1367 (not yet in force) as to the likely changes to be implemented on 31 December 2020.
SANDRA EZE AND SIMON HILL © 2020
33 BEDFORD ROW
NOTICE: This article is provided free of charge for information purposes only; it does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by any member of Chambers or by Chambers as a whole.
Sandra Eze is a barrister and member of the Chartered Institute of Arbitrators.
Simon Hill is a civil barrister called in 2001.
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 https://www.independent.co.uk/travel/news-and-advice/abta-british-travellers-holiday-europe-flight-shame-campaign-a9147226.html (accessed 6.7.20)
 https://issuu.com/abtamagazine/docs/abta_march2019_lowres (accessed 6.7.20)
The Package Travel and Linked Travel Arrangements Regulations 2018 - Guidance for Businesses’, July 2018, issued by Department for Business, Energy & Industrial Strategy, paragraph 79.