Special Report: Clarity emerging on implications of revised package travel rules

Special Report: Clarity emerging on implications of revised package travel rules

The implications of revised package travel rules are becoming clearer. Ian Taylor reports

Abta believes Europe’s revised Package Travel Directive will extend the definition of a package to many Flight-Plus bookings.

But there is concern about ‘grey areas’ in the proposals which leave loopholes for companies to exploit to avoid the extension of tour operators’ liability.

Abta head of legal services Simon Bunce said: “An awful lot of new Atol business is going to need protection. There will be an extension of liability.”

The prospect of such an extension provoked a split in Abta’s ranks last year.

The revised directive, published on July 9, proposes two new categories of booking: ‘customised packages’ and ‘assisted travel arrangements’. The former would be a package, the latter a type of Flight-Plus.

Bunce told Travel Weekly: “Most online travel agents [OTAs] operate a shopping-basket model that would fall firmly in the definition of a customised package.”

“The proposed definition of a package accounts for booking online or in a shop, depending on the process, but I’m not sure a huge swathe of high street agents will be swept up in this,” he said.

Some experts suggest the proposals are unclear on this point, but Bunce said: “It’s pretty clear if you look at the recitals.” These are the parts of the directive that set out reasons for the regulations.

The European Technology and Travel Services Association (Ettsa), which represents OTAs Expedia and Ebookers, is critical of the proposals. But Ettsa secretary general Christoph Klenner agrees “a large proportion” of Flight-Plus bookings would fall within the new definition of a package.

Klenner said: “A large proportion of Flight-Plus bookings would be customised packages. But it will only cover those booked in one transaction, not those within 24 hours.”

That highlights a significant grey area: the timing of transferred data in ‘click-through’ sales.

The directive’s wording appears to leave out any transaction where data is transferred after the conclusion of an initial contract. It defines a package as including a combination of services bought through linked online booking processes where a name or particulars are transferred “at the latest when the booking of the first service is confirmed”. The definition of an assisted travel arrangement repeats the same phrase.

Bunce said: “Anything transferred after the first service is confirmed would be outside the definition.”

That could leave a major loophole which Flight-Plus was designed to close.

Klenner said: “It is impossible to have a clear definition. Everything is a grey area that will lead to opportunities for particular industry players to look for loopholes. I’m sure there are OTAs and airlines out there thinking about how to get around this.”

His view was supported by a senior industry source who said: “People might artificially construct their paperwork to appear to be selling assisted travel arrangements.”

One potential area of confusion can be clarified: the suggestion that the directive lists multiple criteria that must be fulfilled for a booking to be a package.

The Department for Business (BIS), which is responsible for the regulation, told Travel Weekly: “We interpret it as meaning an arrangement would qualify as a package if it meets one of the [definition’s] subsections. That is likely 
to be the way the EC meant it.”

Ettsa reported the EC has confirmed that view.

Package Travel Directive: What next?

Timetable

  • The proposed directive, published on July 9, will now be considered by a committee of the European Parliament and a working group of the European Council of Ministers.
  • The UK’s Department for Business (BIS) will issue a call for evidence this summer to help formulate the government’s position. Industry submissions with supporting evidence will count for more than just opinions.
  • The UK has MEPs in the EU parliament and a place on the Council of Ministers. Either the EU parliament or council may propose amendments, but the council has the final say. The two will probably come together early next year.
  • Groups such as Abta and Ettsa and leading companies such as Tui Travel, Thomas Cook and easyJet will lobby in Europe.
  • The EC will aim to complete the process ahead of European elections next May which will change the European Parliament and lead to a new Commission.
  • The PTD will be finalised about 18 months before it comes into force – likely to be in 2016.

Abta: Corporate travel exemption is a concern

Abta identified several concerns as it began consulting members on the proposed Package Travel Directive this week.

However, it commended most of the proposals. Abta head of legal services Simon Bunce said: “There is a lot of good stuff.

“There is a need to clarify some [proposals]. But what is striking is how closely it follows the current directive. The changes are generally for the benefit of clarity. Things that are unclear in the current directive, like surcharges and retailers’ liabilities, have been made clear.

“There are also not the horrors we feared – there is no cooling off period [after a purchase] and the right to cancel closely follows what we already do in the UK.”

Bunce said the proposed exemption for corporate travel was a primary concern. This would exempt corporate travel “on the basis of a framework contract” between a traveller’s employer and a trader “specialising in the arrangement of business travel”.

He said: “This will work with large travel management companies and corporate clients, but will it work for smaller agents who may not have framework contracts? Business travel may not 
be a major part of their business. That is 
a big problem.”

Bunce added: “Given the scope of the directive, we want the EC 
to get it right.”

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