Ian Taylor reports from the annual debate organised by the specialist legal firm which focused on Foreign Office travel advice and the roles played by both Abta and the CAA in the industry
‘Consumers need to heed FCO, but nowhere is safe’
Holidaymakers need to be made more aware of Foreign Office (FCO) travel advice and what it means, according to Abta chief executive Mark Tanzer.
He said: “We have to get customers to understand that Foreign Office advice is there and that, frankly, nowhere is safe.”
The ongoing inquests into the deaths of 30 UK holidaymakers in Sousse in 2015 have seen lawyers quiz government and industry representatives on the meaning of Foreign Office advice.
Tanzer declined to comment on the inquest, but said: “If you look at the FCO site, it has maps where you have red, ‘don’t go there’, orange, against ‘all but essential travel’, and green. People interpret green as safe, like ‘go’. But if you look at the actual advice, green means not orange or red, it doesn’t mean ‘safe’ and the advice says ‘Don’t go to crowded places, don’t go to demonstrations’.”
He said: “The FCO consulted on travel advisories last year with a view to maybe introducing an additional level between green and orange.
“We came out against that because what would it mean? How would customers and industry interpret a change in advice between a booking and departure?
“Would it mean customers could cancel and get a refund? It wasn’t clear in the Foreign Office thinking.”
Tanzer added: “The structure works for the industry at the moment.”
However, Abercrombie & Kent group general counsel Michael Ellis said: “FCO advice isn’t particularly clear for anyone, especially some consumers.
“Look at France, where there were 12 attacks last year, or Brussels, where there have been a few. People will still go to France, but they won’t go to Turkey.
“It’s just unclear. The FCO and industry have to work a lot closer together to streamline the advice so it’s structured so people can understand what it means.”
Challenges ‘unite’ Abta members large and small
Abta is capable of representing companies of all sizes because of its range of services and the common challenges they face, chief executive Mark Tanzer
He told the Travlaw Big Tent Event in London: “We’re a broad church [but] it’s a blessing to have different [size] entities within the membership.
“Abta has a different product range depending on the size of business.”
Tanzer added: “There is a lot that unites members large or small. We have Brexit and what that means for the value of pound, the impact on the cost base and how it will impact consumer spending. That affects all members.
“We have the shift from the eastern to western Med and the pressure that puts on capacity. There is the regulatory change that people have to figure out.
“If you have hotels and ships, how do you get the volume to cover that fixed cost base in this environment? At the other end, small companies have flexibility, but how do they get heard? Google’s listing fees are enormous.
“The internet has helped large companies. How does a small company get heard in that world? These are the sort of challenges our members face.”
CAA: We’d have tried to prevent Lowcost collapse
The CAA would have acted to try to prevent the collapse of Lowcost Holidays and “would have been there to make sure consumers were fully protected” if the company had not moved to Majorca in 2013.
Palma-based Lowcost ceased trading in July last year with 112,000 forward bookings and a bond for protecting consumers worth just €1.3 million.
CAA head of Atol Andy Cohen said: “If its finances weren’t adequate we could have stopped them expanding. We could have made them get investment. And we have the option to take away a company’s licence.”
He argued: “If the business had failed while having an Atol we would have been there to make sure consumers were fully protected and not suffer the harm we witnessed.”
When it was pointed out many Lowcost Holidays customers who booked with credit or debit cards received at least partial refunds, Cohen said: “The card companies pay out differently.
“Under the Consumer Credit Act [which applies to credit cards] you’re fully covered.” But that is not the case with debit cards, he said.
“We saw people who paid £1,000 for a hotel for a family of four and were asked for £6,000 to rebook. They couldn’t cover that. They recovered the £1,000, but had to let the flight go and lost out. No one protected their flight money.
“The same thing happened to people abroad when the failure happened. They were kicked out of hotels and no one was there to help. The debit card didn’t cover additional payments.”
Debbie Marshall, managing director of Silver Travel Advisor, said: “When Lowcost failed so many people were shocked to hear there was this little bond that protected nobody.”
Travlaw partner Farina Azam agreed, saying: “Why was Lowcost allowed to sell the amount of holidays it did with such a low bond? The Spanish authorities have got off easily for letting them sell holidays in that way.”
Abercrombie & Kent group legal counsel Michael Ellis said: “An enormous amount of people booked Lowcost Holidays with no idea where they were based and no idea they didn’t have the same protection a company based in the UK offers.”
Cohen explains CAA use of Air Travel Trust funds
CAA head of Atol Andy Cohen was asked to explain the regulator’s handling of Monarch Group’s licence renewal last October, when it leased aircraft to repatriate customers in case the group’s Atol wasn’t renewed.
In the event, Monarch secured long-term investment from owner Greybull and had its Atol renewed. However, the costs of the CAA’s action came out of the Air Travel Trust fund, financed by the charge on protected holidays.
Cohen said: “I can’t talk about specifics. [But] the government will tell you it’s not your fund. It’s a tax and belongs to the Exchequer [the Treasury].
“We take our responsibilities of looking after the fund as if it’s our own money, but the driver is making the right decision and not how much we spend.”
He added: “We have statutory duties to perform around airlines, where we have very little leeway in respect of the operating licence [but] we have some leeway around Atol.
“We keep an eye on the problems for the industry, but it isn’t the driver for making the right decision.”
Atol ‘lets small firms take on bigger rivals’
The Atol scheme gives small companies the opportunity to compete with large rivals by offering consumers the same protection.
Andy Cohen, CAA head of Atol, said: “Small businesses don’t need to have the same rigour and concentration on reporting and capital as larger businesses, which present a greater risk to the consumer. However, all have the same Atol badge and can make the same claim of being Atol-protected.
“It doesn’t matter if you’re large or small, Atol is Atol. It gives small companies the opportunity to say they offer the same protection as larger businesses.”
Travlaw partner Farina Azam said: “The Atol badge creates a level playing field. Customers can book with companies of any size and know they have protection. If there were differing obligations it would create unfair advantages. The industry needs a level playing field.”
Cohen dismissed a suggestion that a proposal to allow UK Atol-holders to sell holidays throughout the EU – under new ‘place of establishment’ rules to come into force in 2018 as part of new Package Travel Regulations – would be advantageous only to larger companies.
He said: “Larger entities can trade in all countries [now] and meet the local rules. Smaller ones will have the opportunity to branch throughout the EU without the need to worry about local legislation.”
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