A leading industry lawyer has issued fresh advice to agents and operators facing a deluge of cancellation and refund requests from customers amid the ongoing coronavirus outbreak.
Stephen Mason, senior counsel at Travlaw, pointed to terms in the Package Travel Regulations which the trade should use to guide decisions on whether to issue refunds or offer alternative travel arrangements.
Under the PTRs, package organisers are obliged to offer alternatives or refunds for holidays if they are “constrained” to make a “significant” change to or cancel a holiday.
Speaking at a Travlaw seminar on the legal implications raised by coronavirus, Mason cited a case during the Sars outbreak of 2002‑03 involving Travelsphere (see below) which concluded that if there was a realistic chance the holiday could go ahead as planned, then the operator was not obligated to offer a refund.
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He said many package organisers allowed cancellations up to 21 days before a holiday for situations such as terror attacks and epidemics.However, Mason noted that the key was “whether 21 days is realistic”.
“We are finding clients facing pressure from customers saying ‘we are booked in six weeks’ time and realistically there isn’t a flicker of hope we can go ahead with the trip, therefore we’d like a refund’, so it’s very difficult,” he said.
“There’s isn’t a magic number. I can’t give you a precise number of days. You have to assess that on the basis of what trips and holidays you are offering and whether it’s realistic to say to consumers that ‘in a month from now, everything will be fine; we’ll be able to run the trip’.
“Is there a realistic flicker of hope the holiday can go ahead? If there is, you are not obliged to refund yet; if there isn’t, you should be in the business of making alternatives or offering refunds.”
Mason said that, in law, “significant” means what the average consumer considers significant and that “the only way to test it” is by putting yourself in your customers’ shoes. However, he stressed each case depended “on its facts”.
Mike Ellis, group general counsel at Abercrombie & Kent, said the operator was allowing cancellations to China until the end of April and for clients to defer or switch Asia tours.
SARs/Travelsphere case
Travelsphere had advertised a month-long tour of mainland China which included a small number of days in Hong Kong at the end of the trip, where the Foreign Office advised against travel amid the SARs outbreak in 2003.
However, statistics showed the outbreak was coming to an end so the tour went ahead.
Two claimants contacted Travelsphere and said they did not want to go, but Travelsphere pointed out most of trip was in China, where no travel restrictions were in place, and the outbreak was likely to be gone by the end of the tour. If it was not, then Travelsphere would fly customers home early.
The claimants did not show at the airport and sued Travelsphere for a refund of their money.
However, the court decided that because there was a “flicker of hope” that the tour could operate as advertised, the company was not constrained to make a significant change and offer a full refund under package travel rules, so the claimants lost and got nothing back.