OPERATORS are bracing themselves for a spate of court cases from next year when consumer bodies are given the power to take action over cancellation charges.
And the Federation of Tour Operators has warned that if this leads to changes in brochure conditions consumers will have to pay higher prices for holidays.
The Office of Fair Trading is investigating cancellation fees and, from October 1, the Consumers’ Association and trading standards authorities will have the power to take legal action over operators’ terms and conditions. Under a European Union directive, other consumer bodies will have this power from next year.
Cancellation charges are most likely to be challenged and levels of compensation for unsatisfactory holidays are also likely to come under the microscope.
CA principal lawyer Jackie Hewitt confirmed: “If we find problems we will go direct to the company – if this does not work we will certainly use our power to take them to court.”
She said the main bone of contention was cancellation charges.
Currently, Airtours charges 100% cancellation fees for holidays cancelled between one and 21 days before departure, whereas Thomson retains 90% of the holiday cost or deposit for a cancellation of between one and 14 days.
If cases go to court, operators may have to prove the costs were fair and they were not profiting from them. But FTO chairman Martin Brackenbury warned: “As it stands cancellation fees give specific fair cover to consumers. Any extra costs would be passed to consumers.”
His comments were backed by Airtours Holidays sales, marketing and development director Ed Sims, who said: “Cancellation charges even themselves out over a period of time – you make money on some but you lose money on some, too. They are positioned to offset risk, not make money.
“We can’t offer any better value for money than we do now, so if cancellation charges are reviewed, it could lead to holiday prices going up.
“There is a danger we will get a spate of these cases. Any ruling is highly likely to work against vertically integrated companies. We are just another customer of Airtours International and have to pay for seats, but the OFT won’t see it like that.”
ABTA does not recommend how much cancellation charges should be, but has drawn up a table which shows the balance between what companies are liable for and what clients can expect.
ABTA is advising operators to study its model set of booking conditions, which have been declared fair by the OFT.
The associationis also pushing for the OFT to have a veto over which cases can come to court.
ABTAhead of legal services Riccardo Nardi added ABTA wants a law introduced which restricts publicity of cases to just the result.
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