LTA ‘loophole’ in new package travel rules dismissed as ‘non-starter’

LTA ‘loophole’ in new package travel rules dismissed as ‘non-starter’

Abta says a suggestion that a new category of travel product included in the reformed EU Package Travel Directive offer agents a way to avoid the full responsibility of a package organiser.

The association’s head of legal affairs Simon Bunce told the Hays Independence Group conference in Marbella, Spain, that Linked Travel Arrangements (LTA) is not a loophole.

It has been reported that in Germany the new PTD is being interpreted as allowing two products sold separately but paid for together could be deemed as an LTA.

He said the way a holiday would have to be sold to be an LTA – confirming one component, like a flight before another, like a hotel room – was unlikely to be practical for any travel firms.

Bunce said: “The Germans appear to have decided you can do two things separately but pay for all in one go and it would not be a package. I do not think that works.

“There is another line in the directive that says if the consume pays one price that would be a package.

“I have seen a transcription of the German regulation, actually what it says is youhave to a firm booking of the two things separately.

“The only difference is the Germans say then they can pay the travel agent with one payment. The still a difficult selling process.

“You are going to have to book the flight and not yet looked for availability on hotels but you are on the hook for that flight and if there is nothing available you will lose your money.

“I do not think this is as radical change as [the Germans] think it is and I’m still not sure it’s a particularly attractive selling model.”

John Hays, Hays Travel managing director, added: “To be honest I think it’s [LTAs] a non-starter. Quite frankly it’s not going to happen as a way of getting round the new regulations.

“It’s blatantly trying to get round the new regulations and if you were trying to do that we would have a serious conversation with you.”

Agents were advised to be careful charging one price and adding a margin when dynamic packaging in case that effects their agency agreements with suppliers.

It could effect their agency status and make the liable to pay VAT on their margin as tour operators.

The new EU Package Travel Directive is due to come into force on July 1 but the industry is still awaiting the final revised legislation from the government.

It will mean the majority of what today is termed Flight Plus sales will become full packages and make the travel organiser responsible as the travel organiser.

That means agents will not only have to protect customer money but take responsibility for the delivery and quality of the product.

This means firms will have to have insurance in place for things like sickness claims and personal injury.

The legislation will not change anything for agents selling other operator’s packages under their Atol.

Bunce said: “What you have to look at now is does the way you are selling mean what you are selling becomes packages because that’s a big shift in the business.”

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