An incredibly sad day for the industry. But before we can allow the news to sink in or even take stock, the industry needs to deal with its obligations to customers.

I wrote an article on Friday asking for some calm and highlighting that the UK’s travel industry is very heavily regulated for precisely this reason – to protect customers in the event of a tour operator’s financial failure.

The failure of Thomas Cook will have incredibly far-reaching consequences for the travel industry, particularly those who have sold Thomas Cook holidays or flights as a retail agent, or included Thomas Cook flights (or other services) within their own packages.

Here’s a quick summary of some of the legal issues to consider now that Thomas Cook has entered administration:

Thomas Cook package holidays – where the customer’s contract is with Thomas Cook (or the holiday is protected by Thomas Cook’s Atol or Abta bond)

Flight packages

Probably the financial protection most customers are aware of – flight packages are protected by Atol. Therefore, all customers who have booked a Thomas Cook flight-inclusive package holiday, whether already abroad or due to travel, should be directed to contact the CAA.

If the customers are already abroad and due to return to the UK by 6 October, the CAA is operating repatriation flights. After this date, customers will need to make their own arrangements back.

In addition to flights, the CAA will also make arrangements to ensure the customer’s holiday is provided as contracted – including the customer’s hotel.

If customers are having issues with hotels requesting additional payment from them or threatening to remove them from the hotel, customers should contact the CAA urgently.

Customers should not make payment to hotels unless the CAA has directed them to.

Unfortunately, there is a chance that hotels will not accept an arrangement with the CAA, which means customers may have to be moved to other hotels.

For customers who have not yet travelled – their holiday has been cancelled and they should contact the CAA for a refund. They should not travel to the airport. Please note that if the customer’s flights were not with Thomas Cook Airlines – those flights may still be valid, but the other elements of their package may not be. Customers should contact the CAA for further information on what to do in these circumstances.

Non-flight packages

Thomas Cook was a member of Abta, and non-flight packages are financially protected by an Abta bond. For customers already abroad, they should continue their holiday as normal. If they encounter any issues, such as hotels demanding payment, they should contact Abta for further information. Customers should not make payment again to hotels unless Abta has directed them to do so. Customers who have not yet travelled – their holiday has been cancelled and they should contact Abta for a refund.

Thomas Cook also protected its accommodation-only bookings under the Abta scheme. As such, any customers with accommodation-only bookings where their contract is with Thomas Cook should contact Abta for a refund. If they’re already abroad, Abta’s advice differs to the CAA’s, and Abta advises customers to settle their accommodation bill if required to do so, retain their receipts and submit a refund claim to Abta when they return.

For any retail agents who sold Thomas Cook holidays on behalf of Thomas Cook – where the customer’s contract is with Thomas Cook, or the package is otherwise protected by Thomas Cook’s Atol or Abta – those agents should direct customers to contact the CAA or Abta as outlined above.

Flight-only sales with Thomas Cook Airlines

If customers received an Atol certificate for their flight booking, their booking is Atol-protected and they should contact the CAA as outlined above. If the flights were not Atol-protected then no financial protection applies. If customers paid by credit card, then they should contact their credit card issuer to make a charge-back claim. If customers paid by debit card then some protection may apply and customers should check with their banks. If customers had travel insurance, they should contact their insurer to see if they have any protection in these circumstances.

Any retail agents who have sold flight-only sales as Thomas Cook’s airline ticket agent, then provided your agency status was made clear to the customer at the time of booking, you don’t technically have any liability to the customer. However, if customers made payment directly to the retail agent, then if that customers requests a charge-back – the retail agent may incur the loss. Any such chargeback claims should be defended in the first instance on the basis that the customer’s purchase isn’t suitable for a chargeback under s.75 of the Consumer Credit Act 1975 due to the payment not having been made directly to the supplier, but instead to a retail agent.

Retail agents may have some success with this argument – but it’s not guaranteed. Otherwise, if customers have travel insurance – they should be directed to contact their insurer for a refund.

Travel agents or tour operators who have included Thomas Cook flights or other travel services within their own packages

The Package Travel & Linked Travel Arrangements Regulations apply and if you’re a package organiser, you’re under a legal obligation to provide the customer with their package holiday.

This will mean trying to arrange alternative flights to enable the customer to either return to the UK (if they’re already abroad and were booked on Thomas Cook airlines), and the package organiser is liable for the additional costs incurred – they cannot pass this on to the customer.

If customers have not yet travelled, the package organiser will need to make alternative arrangements to allow the customers to travel. If the alternative arrangements result in a significant change (i.e. departure time changes by more than 12 hours), then customers are entitled to cancel their booking without incurring cancellation charges should they wish to do so.

The reasoning behind any change should be explained fully to the customer to allow them to make an informed decision. Hopefully most customers would understand the circumstances behind the change and accept it. If customers accept the changed arrangements and this is a lower standard (for example they lose a day of their holiday), customers are entitled to a price reduction.

If package organisers are unable to offer suitable alternative arrangements (for example due to a lack of capacity, or the cost of making such alternative arrangements is disproportionately high), then customers are entitled to a full refund of their monies paid. However, customers may also be entitled to compensation under the PTRs in these circumstances – as such, offering suitable alternative arrangements is preferable – if possible.

If you’re a travel company who is lucky enough to have supplier failure insurance in place, you should be able to recover any losses you incur from your insurer.

Disclaimer:

I do need to a put a disclaimer on the above advice (I am a lawyer after all). I’ve given a brief summary of some of the legal issues to consider for the most common types of bookings affected by Thomas Cook’s liquidation. The above advice is given on a very general basis and should not be taken as a substitute for specific legal advice.