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PI and Civil Litigation

Law - practice - procedure

16 JUL 2013

Brave New World?

Sarah Crowther

Barrister

The European Commission moves to strengthen holidaymakers' protection and to clarify the Package Travel Directive

In a new proposal announced on 9 July 2013 [1], the European Commission plans to update the Package Travel Directive 90/314/EEC. The reason stated is the change in modern travellers' booking habits, although the opportunity has been taken to ‘remove ambiguities and close legislative gaps.' Around 23% of consumers now buy their holiday on a customised basis through traders who are commercially linked to one another. Take, for example, the traveller who purchases a flight and then goes onto rent a hire car via air carrier's website. A recent survey showed that 67% of EU citizens mistakenly thought that the package travel protections applied to these kind of arrangements.

Extends scope of package

The first major change of the intended new legislation is to extend the scope of the protections to make them wider than traditional ‘off the shelf' pre-arranged package holidays. Such arrangements account for only 23% of the modern holiday market. The proposed new legislation will additionally cover combinations of travel services purchased either from one supplier on a single website or one high street travel agent, even where the consumer has freedom to select the components individually, so long as there is only one contract with the consumer. It would seem that a new requirement to provide the consumer with information as to who is responsible for the provision of services in their holiday is intended to ensure that holidaymakers are aware of their rights, or perhaps, lack of them. It is clear that the Commission wishes to tackle that sector of the travel industry which has devoted much time, trouble and litigation to the avoidance of the package travel directive.

There is a whole new definition of package which contains several significant points of distinction to the ‘old' definition. First, a package holiday will arise ‘irrespective of whether separate contacts are concluded with individual travel service providers' where the services are purchased from a single point of sale within the booking process. The package in such a case attaches to ‘all contracts covering services provided in the package'. This wider definition is clearly an attempt to demolish the byzantine contractual and agency structures which are sometimes put in place in an attempt to defeat the Directive [2]. The other major extension is where the travel services are purchased from separate traders through linked online booking processes where the traveller's details are transferred between the traders by the time that the booking of the first service is confirmed.

So-called ‘click-through' services (one example in the draft directive of the new concept of ‘assisted travel arrangements') will remain outside the scope of the package travel directive. Where a customer, having already bought his flight online, is invited to ‘click-through' to hotel accommodation or car hire websites, these arrangements will not constitute a package, but there will be increased requirements to provide the customer with information about which party is responsible for performance of the separate elements and also new rights to refunds of part-payments and repatriation in the case of insolvency of one of the service providers. This means that click-through customers can be repatriated for free in the event of airline insolvency.

Reinforces existing rights

In addition to the extended scope of package protection, existing package travel rights are to be reinforced. In particular customers of package holidays will be given the right to cancel free of charge in certain force majeure situations, such as war, natural disaster or possibly even in the event of foreign office advice not to travel.

Price increase controls are to be strengthened, with customers benefitting from a 10% cap on any price increases. Finally, a development which may in practice bring significant changes for consumers, intermediaries will be liable to the consumer for booking errors in packages, presumably even where they are not party to the contract for the holiday.

The liability provisions are re-grouped, meaning that the old Article 15, the staple of personal injury practitioners in travel, is no more. There are minor changes to the wording of the organiser's defences, but more substantially perhaps, the additional defence is provided where the traveller ‘fails to inform the organiser without undue delay of any lack of conformity which the traveller perceives on the spot if that information requirement was clearly and explicitly stated in the contract and is reasonable, taking into account the circumstances of the case.'

Removes some complexity

On the other hand, it is clear that the Commission has paid heed to some of the travel industry's concerns about the unnecessary red tape in the package travel directive. It is made clear that only an organiser of a package is liable for its performance, abolishing the previous oddity which suggested that the mere retailer of the package could also be liable. Expensive and burdensome brochure requirements are to be abolished. Also, managed business travel will be removed from the scope of package holiday protection. Finally, in a move which is aimed at increasing cross-border operations by travel services operators, mutual recognition of insolvency protection schemes will mean that an ATOL registered operator can sell packages to travellers in Member States other than the UK without the need to subscribe to other local insolvency protection schemes.

Finally, there is an intention to harmonise the rights which customers enjoy against the other party to their package contract and carriers. It is proposed that in future a package customer will be able to invoke his or her rights as a passenger against the package operator as well as any carrier. However, in the event of another ash cloud, the package operators will be able to limit their liability to accommodate stranded customers to 3 nights.

There is clearly some distance to travel before these proposals, or something like them, become a Directive and then are implemented into UK law. The traditional tour operators have signalled a welcome to the clarification of the scope of package protection [3] and it is clear that individual consumers will support these elements of the new regime as well.

[1] http://europa.eu/rapid/press-release_IP-13-663_en.htm and the draft directive COM (2013) 512 final 2013/0246, Directive 2011/83/EU at http://ec.europa.eu/justice/newsroom/consumer-marketing/news/130709_en.htm

[2] See for example CAA v Travel Republic Ltd [2010] EWHC 1151 (Admin), [2010] CTLC 61.

[3] For example: TUI: http://www.tuitravelplc.com/content/tui-travel-welcomes-eu%E2%80%99s-revised-package-travel-directive-%E2%80%9Cptd%E2%80%9D-proposal

Sarah Crowther, Barrister, 3 Hare Court

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