The Package Travel Regulations (“PTRs”), which came into force in 2018, have been tested significantly in recent years with failures such as Thomas Cook and Monarch, in addition to the COVID-19 pandemic.
The Department for Business and Trade (“DBT”), formerly known as the Department for Business, Energy and Industrial Strategy (“BEIS”), undertook an informal review of the PTRs last year. Please see our previous article, which discussed some of the proposed changes.
Initially, it appeared that, unlike the parallel review of the Package Travel Directive (“PTD”) in the EU, the UK was not going to undertake a root-and-branch review of the PTRs. Nevertheless, the DBT is now considering more substantial reforms. Given that the UK no longer needs to implement the EU PTD, these reviews may result in the UK and EU diverging more significantly in terms of how package travel is regulated in the future.
In September, as part of the Government’s programme on “Smarter Regulation to Grow the Economy”, the DBT launched a consultation to seek feedback on how to amend the PTRs to create a proportionate system that balances a high level of consumer protections whilst reducing the regulatory burden on businesses.
Out of the consultation, we think the following proposals are of most interest (and could have a significant impact on the industry if implemented):
Supplier refunds – The PTRs provide that where an organiser pays compensation, they may seek redress from any third party that contributed to the event triggering compensation. However, as we saw during COVID-19, this mechanism does not always align with the requirement for organisers to provide refunds to customers within 14 days. The DBT is interested to know whether package organisers have been finding it difficult to obtain refunds from suppliers and how the legal right to redress set out in the PTRs is working in practice.
Domestic packages – The DBT is considering the extent to which the existing rules are needed by domestic-package users given that many of the extra protections available to travellers under the PTRs are of more relevance for trips with an international element (e.g. repatriation). Therefore, the compliance burdens placed on businesses may be disproportionate to the benefits consumers receive. The DBT has presented three options for consideration: (i) remove all domestic packages from the scope of the PTRs, (ii) remove domestic packages from the scope of the PTRs unless they include transport of passengers and (iii) keep all domestic packages in scope of the PTRs.
Linked Travel Arrangements (“LTAs”) – Feedback has consistently been that LTAs are confusing, rarely used and challenging to enforce. The DBT is considering deregulating LTAs, either totally or partially, or possibly broadening the definition of “package” to include LTAs.
Other tourist services – The DBT is considering rationalising when a combination of an “other tourist service” and another element (e.g. transport or accommodation) will be a package holiday or a linked travel arrangement. Currently, the other tourist service must either: (i) be an essential feature of the trip; or alternatively (ii) amount to a significant proportion of the total value of the trip (typically considered to be 25% or more). The DBT is considering abolishing (ii) so that the only test is whether the other tourist service is an essential feature.
Insolvency protection – The DBT recognises that it is sometimes difficult for travel companies to source insolvency protection. Therefore, it is considering whether to add more flexibility to the insolvency protection mechanisms for non-flight packages by: (i) allowing a combination of a trust account and a bond to be provided (in addition to the current option of a bond plus insurance); and (ii) whether some allowance/discount ought to be made for credit card bookings (on the basis that the customer has a right to a refund from the card issuer).
Extenuating circumstances – The DBT is considering whether the strict obligations set out in the PTRs should be relaxed in extenuating circumstances. In practice, many package organisers were unable to meet the 14-day deadline for refunding customers during the pandemic and so the DBT is looking at whether this should be recognised in the PTRs in some way.
The following proposals are also included in the consultation, but we feel will have less of an impact (if implemented):
Information requirements – There is a consensus that the PTRs are too complex and that there is a low level of consumer understanding. Therefore, the DBT is considering rationalising some of the pre-booking information which has to be provided to customers.
Business travel exemption – The DBT is considering extending the scope of the PTR exemption for business travel so that the exemption applies even without there being a business travel agreement in place (as is currently required).
Minimum threshold – Currently the PTRs apply to all packages regardless of the cost of the package. Therefore, a business offering a low-cost package has to comply with the same regulatory requirements as a business offering a higher value package. The DBT is considering whether to set a financial threshold for the value of a package holiday before it falls within the scope of the PTRs.
Location of insurance provider – Currently, the providers of financial failure insurance must be authorised in the UK, Channel Islands or Isle of Man. The DBT is considering whether to relax the territorial restriction in order to allow more insurers to come into the market.
The call for evidence closes on 13 December 2023. Following analysis of the feedback, the DBT plans to follow-up with a consultation on detailed proposals in the first half of 2024.
We would encourage all our clients to engage with the consultation process as this is an opportunity to really improve the situation for package organisers. Please don’t hesitate to contact the travel team at Fox Williams if you need our help in formulating a response to the consultation.
Need more information about the above people and legal expertise? Talk to one of our lawyers: +44 (0)20 7628 2000
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
1 year 1 month 4 days
Google Analytics sets this cookie to calculate visitor, session and campaign data and track site usage for the site's analytics report. The cookie stores information anonymously and assigns a randomly generated number to recognise unique visitors.
1 year 1 month 4 days
Google Analytics sets this cookie to store and count page views.
YouTube sets this cookie via embedded YouTube videos and registers anonymous statistical data.