This briefing note examines the Department for Business, Energy and Industrial Strategy’s (DBEIS) response to the consultation on implementing the European Package Travel Directive 2015 (“PTD 2015”) and the resulting impact on civil claims under the new regulations. The PTD 2015 replaces the 1990 Directive of the same name and which was implemented in the UK in regulations dating from 1992.
The PTD 2015 was agreed in Europe more than two years ago, with Member States having until 1 July 2018 to take steps necessary to implement it in their domestic laws. The UK Government formally consulted with various stakeholders in the travel sector and, on 13 April 2018, published its final response to the various consultations. The response sets down the likely scope of the new regulations required in the UK as well as timescales for implementation.
There are a range of reasons why the 1990 Directive & 1992 regulations were reviewed, but chief among them has been the growth of ‘dynamic packages’ - in which the consumer combines different modules such as flights, accommodation and car hire, often using the same online platform for each element - which fell outside the scope of the regulations and thus led to a two tier system of consumer protection. This was a loop-hole intended to be closed by the PTD 2015.
It is worth noting that the majority of the PTD 2015 has direct effect on all Member States and so was not included in the DBEIS consultation. However, Member States do have the ability to extend the scope of the Directive’s application, which has led to significant discussion over the new definitions of a ‘Package’ and a ‘Linked Travel Arrangement’ (“LTA”).
The PTD 2015 will be implemented in to English law by a new Package Travel Regulations 2018 (“PTR 2018”).
The plan for implementing the Regulations in draft was put before parliament earlier this month. The PTR 2018 will come in to force on 1 July 2018 (in accordance with the timing in the PTD 2015 itself). The PTR 2018 will not be implemented retrospectively and will only apply to bookings made after 1 July 2018. The 1992 Regulations will continue to apply to any bookings made before that date.
PTD 2015 – an overview
Some of the key proposals were as follows:
- Holidays that fall within the Directive can either be a ‘Package’ or an LTA. There are two types of LTA (a) where a customer visits one company’s point of sale (i.e. website) and buys two separate travel services, paying separately for each; and (b) where a customer buys one travel service from a company and ‘in a targeted manner’ then buys another travel service from a separate company
- A Package or LTA no longer requires transport and accommodation, and/or other ancillary services. The Directive requires two ‘travel services’ which are defined as (a) carriage of passengers; (b) accommodation; (c) vehicle rental – which represents at least 25 per cent of the value of the combination; and (d) any other tourist service not intrinsically part of a travel service
- Holidays no longer need to be booked for an “inclusive price.” Instead the term ‘total price’ is introduced, which means that even if separate prices are charged for each component of the holiday, as long as they’re purchased through a ‘single point of sale’, an LTA applies
- The components don’t all have to be purchased from the same company at the same time, as long as they’re purchased through a ‘single point of sale’ within 24 hours. For example, if a customer books a flight via an airline’s website and is then re-directed to another website to book a hotel, this will still be caught by the Directive
- Business travel and ‘occasional not for profit’ travel is excluded. This is intended to capture things like school trips and charity holidays
- Tour operators are permitted to charge termination fees where a consumer cancels a booking unreasonably and consumers are also given a right to cancel without charge, “in the event of unavoidable and extraordinary circumstances occurring at the place of destination”
- Where holidays are sold by a retailer that isn’t an ‘organiser’, it is possible that the same liability applying to the organiser could apply to the retailer
PTR 2018 – likely changes arising from the DBEIS consultation
Definition of a Package and LTA
It’s not surprising that this issue was the most commented upon in the consultation. Stakeholders criticised the definitions for their lack of clarity and the apparent cross-over between the description of a Package and an LTA. The 24 hour timescale between the booking of two travel services was felt to be arbitrary and open to abuse (i.e. the second travel service could simply be booked after 25 hours). It could be difficult to calculate whether other tourist services (such as car hire) amounts to 25 per cent of the holiday value.
The government drafted a number of simplified, alternative definitions of Package and LTA for discussion during the consultation. It was felt that the alternative drafting caused more problems than it resolved and as such the original wording in the PTD 2015 will make it in to the PTR 2018 unaltered.
Business and ‘Occasional Not for Profit’
The consultation accepted the ‘light tough’ proposals and the exclusion of these types of trips will survive in the PTR 2018.
Despite calls from the Tourism Alliance to dis-apply the new regulations on domestic packages once Britain leaves the EU, they will continue to apply. DBEIS indicated it will review the issue six to12 months after implementation.
Right to cancel
Many tour operators objected to the inclusion of a consumer’s right to cancel in the event of ‘unavoidable and extraordinary circumstances’. However, the government has taken the view that it will not provoke a significant change from the current regime and as such will survive in to the PTR 2018.
Liability of Travel Agent
The government has decided not to extend the same liability that an Organiser would face to a retailer that has sold the holiday (but wouldn’t be considered an Organiser under the Regulations).
The consultation deals with numerous other issues including insolvency protection and the appointment of the CAA as a ‘central point of contact’ where UK tour operators sell holidays in other member states.
After what has been a significant period of consultation - the PTD 2015 itself was agreed in Europe more than six months before the UK’s EU referendum - the government will implement the new PTR 2018 in a form almost unaltered from the text of the Directive.
From a civil claims perspective, we anticipate that early litigation could flow from the definition of ‘Package’ and ‘LTA’. Notably, (a) on certain phrases, such as “in a targeted manner”, “single visit” and “separate selection”, (b) in relation to the requirement that travel services are booked within 24 hours of each other and (c) when assessing whether other tourist services amount to 25 per cent of the value of the holiday; and (d) regarding the definition of “extraordinary and unavoidable” incidents for the purposes of free cancellation by consumers.
The continued application of the PTR to domestic travel arrangements will need to be assessed. No doubt further guidance will be given by the government on this issue in the six to 12 months after implementation, as promised in its recently-published response.
It remains to be seen whether Brexit will have any impact on the scope and definitions of the PTR 2018 after March 2019, but given the degree of consultation that has taken place, this looks unlikely in the short to medium term at least.
It should also be noted that the 97th Update to the Civil Procedure Rules was released on 16 April 2018, which implements the introduction of Fixed Recoverable Costs (“FRC”) for package travel disputes. The new rules relate to claims in relation to gastric illness only and will apply to all claims notified on or after 7 May 2018. A new Pre-Action Protocol has also been introduced for package travel illness claims.
The number of recent changes to the legal framework surrounding travel claims reflects the dynamism of an industry that has faced significant challenges over the last 18 months. It’s hoped that the imposition of FRC for travel illness claims offers a similar level of certainty and fairness to tour operators as the new PTR 2018 provides for consumers.