The Department of Business and Trade (DBT)’s proposals, which were revealed in September, include setting a minimum cost threshold for the package rules to apply, deregulating domestic holidays, as well as simplifying or scrapping Linked Travel Arrangements.
But the Competition and Markets Authority (CMA), in its response to the DBT’s call for evidence, warned that these “significant changes” to the PTRs could have “unintended and unforeseen consequences”.
“The CMA believes that one of the primary reasons consumers select a package holiday is the higher level of protection it offers,” said the CMA in its response.
“Should this no longer be the case, consumers may have less protection when things go wrong and vote with their feet, which could lead to significant change in the sector.”
‘Poorer consumer outcomes’
The authority added that the proposals could “reduce the standard of protection” offered by tour operators selling packages to UK customers compared with holidaymakers in other countries.
It said removing financial protection from domestic packages “could generate confusion for consumers, especially if the same tour operator offers both protected foreign holidays and non-protected domestic ones”.
Trade bodies, such as Association of Atol Companies, have already been seeking "greater clarity" on the government’s proposals.
“Although package travel operators would still be free to offer a higher standard of protection, the burden may shift to the consumer to shop around effectively and find the suitable level of protection for them,” argued the CMA.
“This could weaken effective competition between firms due to higher consumer search costs, as well as potentially leading to poorer outcomes for some consumers, particularly those who choose a package due to convenience and value for money.”
Loophole risk
The CMA said that setting a cost threshold for the application of the PTRs could also “lead to complications around compliance”, as well as “a lack of clarity” for clients.
“The consultation proposes that this threshold could be determined by total cost, which could disincentivise operators offering trips to large groups, or by average cost, which could become difficult to calculate,” it added.
“This could lead to a lack of clarity for consumers around whether their trip is protected if an operator does not make this clear at booking. Operators could exploit loopholes in cost calculation to deny refunds to consumers.”
