In a surprise move, the Department for Business and Trade (DBT) has leapfrogged the Department for Transport (DfT) and the CAA, who have been pondering reform of the Atol scheme for nearly five years, and published their proposals to tweak the Package Travel and Linked Travel Arrangements Regulations (PTRs).

Having said that, changes are limited to on a few specific areas, and in most cases, the DBT's conclusion is that there should be no change at all. This makes the task of implementation much easier, and the consequences may be less drastic than some initial proposals for Atol reform.

The DBT has said “no” to exempting domestic packages from the PTRs, a decision that may be welcomed by many who saw the risk that consumers who assumed there was protection, as in the case of the collapse of Shearings Holidays, and paid in cash, so would have no credit card protection, would be left with no redress if the exemption had proceeded.

It has also decided not to extend the options for financial protection, considering the choices available in the market sufficient.

On the same theme, the DBT has accepted the advice of the travel industry to continue limiting the source of insurance protection to those businesses authorised to do business in the UK, Channel Islands and the Isle of Man.

To have allowed any other insurer would have posed an unacceptable risk to the travel company, and therefore the consumer, if the insurer failed.

The definition of a package holiday, including "tourist services which form a significant part of the package", will also remain unchanged, possibly because the DBT could not decide how to change the wording.

'Goodbye linked travel arrangements – you deserved to die'

But there are to be two major changes – one of which will affect consumers directly, and one which will be of importance to the package providers themselves.

In a move strongly supported by the vast majority of package operators, Trading Standards – who have the unenviable task of trying to enforce the PTRs – and every consumer group that responded, linked travel arrangements (LTAs) are disappearing altogether.

The original plan was never clear and the protection they afforded was virtually illusory. They also risked confusing the consumer into believing they had far more protection than they had. LTAs deserved to die.

Some LTAs will become packages, as they should have been in the first place, others will offer no protection at all. Hopefully, an education programme will ensure consumers know what to look for in the future. Few will be sorry to see them go.

The second change relates to Regulation 29 – the right to seek redress from third parties who themselves are the cause of the problem. These can be airlines or overseas suppliers who cancel bookings at the last moment, leaving the organiser to pay for alternative services.

The high-profile action taken by On the Beach against Ryanair, which refused refunds during Covid, arguing the flights still operated even if it was impossible for passengers to travel, showed how difficult it can be to succeed in recovering losses.

The proposals will amend Regulation 29 to read that refunds must be given to the package organiser within 14 days of the cancelled services and make it clear that there is a right to redress, not just as at present, a right to seek redress.

This leaves the problem of enforcing that right. Organisers will have to make it clear in their contracts with suppliers that this is what they expect. However, overseas suppliers may simply not agree, and airlines may say it is impossible. That is a problem for the future.

'This is just a starting point'

Overall, the outcome is a good one, but that is because so few of the issues that affect the industry were tackled. The DBT has agreed there is much more to be done – explaining when consumers can cancel free of charge under Regulation 12, for example – and hopefully these will be dealt with as soon as this legislation is in force.

All of this his appears to be an outcome that the vast majority of package organisers should be pleased with. But it is just starting point, there is much more to do, not least the changes to the Atol scheme, which we await.

Again, the possibility of aligning the two schemes more closely has been lost, but we have been repeatedly told that is not really an option so those who sell both air and non-air packages will just have to continue dealing with two separate systems of protection in the future.

Alan Bowen is legal advisor to the Association of Atol Companies.