Changes to the Package Travel Directive will be implemented on July 1, 2018. In the first of a series looking at different aspects of the legislation, Abta’s director of legal affairs, Simon Bunce, offers advice on how agents can prepare.
With less than 12 months to go before the introduction of new laws on the sale of package holidays and linked travel arrangements (LTA), you should be starting to think about how these changes will affect your business.
This task is made more difficult by the fact that we have not yet seen the final version of the law and do not expect to until much later this year.
It is further complicated as the UK regulates the financial protection of holidays with flights under the Atol regulations, and holidays that do not include flights under the Package Travel Regulations. Both regulations need to change and each is the responsibility of a different government department.
However, there are some elements that we know about now and here are some guidelines on how you can start to make plans.
First you must review the types of travel services that you sell and understand how they will be affected in the future.
If you are currently a package organiser or a travel agent that only sells packages arranged by other organisers, there will be some additional obligations, particularly around the provision of information, but fundamentally what you sell will be largely unchanged.
There are greater changes for travel firms selling Flight-Plus holidays or travel services as an agent for different suppliers. Companies who only sell single services such as flight-only or accommodation-only may find themselves regulated where they have links with other service providers.
The intention behind the review is to ensure that more consumers are protected. That protection is made up of clear pre-booking information, a single company taking responsibility for all the holiday services, the protection of monies paid for the holiday if the organiser or the service providers go bust and, if relevant, the repatriation of the holidaymakers.
As customers have sought ever more flexible combinations for their holidays and the trade has adapted to deliver these, increasing numbers of customers found their holidays were not covered by the regulations put in place for their protection. So this is where travel companies will see the greatest change under the new laws.
First, the range of sales that will be classed as packages will be increased. A package holiday will no longer simply be a pre-arranged combination of services sold at one price.
Most holidays currently sold as Flight-Plus will be classed as packages, as will holidays where a customer discusses their options with a travel agent and chooses what they want before going on to book them all together.
These changes will affect many sales by travel agents and those agents will become the organisers of the packages with the additional responsibilities that entails.
Not all combinations of travel services will be classed as packages, however. Where individual services are booked and paid for separately albeit during the same visit to a travel agency or website; or they are booked with different companies through targeted offers, the directive creates a new class of regulated holidays, the LTA.
Selling in this way comes with a lower level of obligation and risk for the business but with less protection for the customer.
The key difference between a package and LTA is that with the latter, the trader (agent or operator) is only required to provide financial protection in the event of their failure, not the failure of the other suppliers.
And the trader is only liable for the services that it sells as principal. With a package, the agent or operator that organises it is liable for both financial protection and the actual provision of all the services offered as part of the package, including health and safety issues.
Whether you sell packages or LTAs, you will be required to provide customers with more information before booking.
This includes information about whether the holiday is generally suitable for persons with reduced mobility and also information about who is responsible if you or any of the service providers go bust.
Providing this information at the right stage will involve changes to the booking process. We are still waiting to hear how this will affect Atol certificates.
For now, start planning how you can provide this information so you are ready to make changes when more details are available.