Industry urged not to panic after Tui cancellation charges case

Industry urged not to panic after Tui cancellation charges case

The significance of a legal victory by a consumer who challenged the scale of cancellation charges imposed by Tui Travel has been played down.

Bruce Crawcour of Shrewsbury brought the case having had to cancel a Thomson holiday to Majorca at six days’ notice last May because of illness.

The customer services department at Thomson parent Tui Travel insisted that its cancellation clause permitted the operator to withhold the full amount paid for the holiday – some £2,200.

Crawcour took the case to the Small Claims Court on the grounds that Tui was in breach of the Unfair Terms Consumer Contract Regulations 1999 and the 2004 guidance from the Office of Fair Trading on Unfair Contract Terms in Package Holiday Contracts.

The ruling was said to have been hugely significant and could cause all operators to rip up their existing terms and conditions.

But Stephen Mason, partner at leading industry law practice Travlaw, dismissed this:

"My message to the industry would be don't panic. Decisions in the small claims court (in Telford or anywhere) are often a rough and ready form of quick-fire justice, which are of little authority.

"By contrast, in 2002 after intensive research the OFT found that cancellation charges were generally fair, and little has changed since then. I await Tui's appeal with interest."

In the case Crawcour had argued fair trading rules only allows operators to impose a sliding scale of charges which increase as the departure date approaches provided they are a genuine pre-estimate of the holiday company's loss.

The vast majority of operators impose such charges, which usually rise to the full holiday cost if you cancel within two weeks of departure.

Crawcour pointed out that the internet and development of real-time information over the last 10 years has fundamentally changed the situation since these clauses were written.

Operators can now measure easily and precisely whether they have made a loss or not on a cancellation, and holidaymakers should not be unfairly penalised by an arbitrary charge.

In particular, he argued that the 100% charge for cancellations within two weeks of departure was unfair.

The judge decided in favour of Crawcour, ruling that the cancellation band in the contract for the holiday could not be a genuine "pre-estimate of loss" and was therefore an unfair contract term, The Telegraph reported.

Crawcour was awarded a full refund of the cost of the holiday plus all his court fees. Tui asked to be allowed to appeal to the High Court.

A company spokesman said leave to appeal had now been granted, and so it would be inappropriate to comment further at this stage.

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