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Travel industry news

24 May 2019

BY Tom Parry & Rob Gill

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Experts at odds over liability of package organisers

The CAA found itself at loggerheads with a travel industry lawyer at Abta’s Travel Law Seminar on Thursday (23 May) over agents’ legal responsibilities around so-called “Package Plus” bookings.

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“I don’t see how the fact you’ve sold hotel accommodation as an agent alongside the package makes you the organiser. Ultimately, this hasn’t been tested in court.”

Rhys Griffiths, partner and head of travel at Fox Williams, discussed whether under the new Package Travel Regulations implemented last July agents may be deemed a package organiser for selling certain travel services in addition to a package.

 

He used the example of selling a client a night at an airport hotel prior to their package holiday departure – with both elements purchased in the same transaction.


“Is it deemed a package? If it is then you would be the person who enabled it to take place,” he said.

 

“It’s a grey area, but in my view, it is not a package – you have a package and a separate travel service. I don’t see how the fact you’ve sold hotel accommodation as an agent alongside the package makes you the organiser. Ultimately, this hasn’t been tested in court.”


David Bourne, head of regulation and governance at the CAA, said in its role as “a very consumer-focused” organisation, liability came down to extra travel services impacting “the effective delivery and the consumer’s enjoyment of the holiday”.


“Rhys’s example is only one possible way this issue emerges,” he said. “Another example would be selling a safari, a package in its own right, then adding a flight. If anything was to go wrong with that element, we would say the purpose of the new regulations has been defeated.


“The purpose of the law is packages, and things that look like packages, are protected. We have taken legal advice that doesn’t agree with Rhys’s interpretation and supports an alternative version of the law.”


Despite the debate around liability, Bourne said the CAA was currently not aware of agents selling additional travel services as “causing big issues” with “no harm being done”.

Travel agents ‘still confused’ over PTR

Agents are booking more third-party packages to ensure they do not fall foul of the Package Travel Regulations.


The new rules on selling travel products were introduced last July, but lawyers at Abta’s Travel Law Seminar said there was still “confusion” over what the regulations meant for many businesses.


Joanna Kolatsis, director at Themis Advisory, said: “Confusion is still happening as people get used to the new regime. Agents are choosing to avoid acting as organiser. It’s quite complicated, so it’s easier [for them] to sell third-party licensed products.”


Kolatsis added current guidance from the Department for Business, Energy and Industrial Strategy “leaves so much open to interpretation” on the new rules.


She also said there were several specialist businesses that “did not fit the mould”, particularly in areas such as wellness, events businesses and cultural or religious tours.

 

“If you take a yoga retreat, where it’s pretty much based around a lovely experience, then suddenly you make it very bureaucratic,” she said.


“They are probably only doing a few hundred passengers, but they are having to invest a huge amount of time and money getting to grips with the new regime.”


Matt Gatenby, senior partner at Travlaw, added: “A lot of people are still finding their feet. A large segment of people are having to look at things with fresh eyes and are finding their way.”

TOMS warning

 

The UK will have to create its own version of the Tour Operators Margin Scheme (Toms) if there is a no-deal Brexit, operators are being warned.


There would be an immediate change to the way tour operators pay VAT if the UK crashes out without a Brexit deal, according to David Bennett, VAT consultant with Elman Wall Bennett. He explained because Toms was a EU scheme, it would have to be replaced by a UK version straight away.


Bennett said this would be “identical” to the current Toms, except tour operators selling to EU destinations would not have to pay VAT in the UK on these holidays.


Operators would only have to pay VAT on their margin for sales of travel within the UK.


But Bennett warned tour operators could have to register for and pay VAT separately in each of the EU destinations it sells to UK holidaymakers.


“There’s a risk that operators will have to pay VAT in those markets,” he added. “It will be an awful lot more complex, although the total VAT may end up being less.”

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