Comment: The regulatory gap between the UK and EU on package travel reform is widening

There is a notable difference in approach despite similar challenges, says Deloitte Legal’s Luke Golding

Reform of the UK Package Travel Regulations (PTR) and the EU Package Travel Directive (PTD) has been on the horizon for several years. In recent months those reforms have progressed and we now have a clearer idea of the changes that the UK government and European Commission (EC) intend to implement.

The UK’s Department for Business and Trade (DBT) has launched a call for evidence and the EC has made a proposal for a directive to amend the PTD. Each of these sets out the approach the respective bodies intend to take towards reform of package travel legislation.

While the respective proposals raise points that warrant close consideration, one overriding theme is that, for the first time since the early 1990s, we may be heading towards a divergence between how the UK and the EU regulate the sale of package travel.

EC approach to reform

In the explanatory notes to its proposal, the EC makes clear that one of its primary goals is to, “strengthen the level of consumer protection, at all times, including in the event of a major crisis, while improving the functioning of the internal market in the package travel sector”.

The reforms proposed by the EC are consistent with this stated objective. For instance:

Advance payments

  • One of the more significant proposals is a limitation on the advance payments that organisers can seek from customers, limiting deposits to 25% of the package price and restricting organisers from collecting balance payments more than 28 days before the start of the package.
  • While there is some flexibility, permitting organisers to request a higher deposit if necessary to ensure the organisation and performance of the package, this is nevertheless an additional restriction on package organisers.

Customer cancellation

  • The proposals include a notable expansion to the customer’s right to cancel a package and receive a full refund in the event of unavoidable and extraordinary circumstances.
  • Currently, this right only arises if such circumstances occur at the place of destination or in its immediate vicinity and significantly affect the performance of the package or the carriage of passengers to the destination. However, the EC proposes expanding this right so that it also applies where unavoidable and extraordinary circumstances occur at the customer’s place of residence, place of departure or where they otherwise affect the customer’s journey to the destination (provided they significantly affect the performance of the package).

Definition of a package

  • The EC also proposes broadening the, already wide, definition of a package, so that a package can be created where:
    • a customer purchases one travel service and then, within three hours, returns to the same point of sale to purchase another type of travel service for the same trip;
    • the above process takes place, but the customer makes the second purchase within 24 hours of the first, provided the customer was invited to book more travel services before the first purchase was made; or
    • a customer purchases travel services from separate traders, through a linked online booking process, provided the customer’s name, payment details, e-mail address or other personal data is transmitted from the first trader to the second.

It appears that the cumulative effect of the proposed reforms to the PTD is an increase in the regulatory burden imposed on package organisers, even though some of the other proposed changes assist them.

UK government approach to reform

In a call for evidence launched late last year, the DBT set out the approach towards reform of the PTR; the UK government’s intention is to “retain key safeguards of consumer protection’ whilst also taking the ‘opportunity to reshape the regime, so it delivers for consumers and supports the travel sector to thrive”.

Indeed, the background to the call for evidence makes clear that, in considering potential options for reform, the government’s focus is not on consumer protection alone but also on the burden placed on organisers by the PTR, noting that “there are some circumstances where … the balance between consumer protections and burdens on businesses may not be right”.

Again, the proposals for reform are consistent with this stated approach. For example, the DBT is considering (among other proposals):

  • removing all domestic packages from the scope of the PTR or exempting domestic packages that do not have a transport element;
  • whether changes should be made to ensure the PTR better caters for any future extreme extenuating circumstances (such as those experienced during the Covid-19 pandemic) and whether applying flexibility to certain rules (eg the requirement to issue refunds to customers within 14 days of cancellation) would support consumers to understand what they can demand from organisers and to encourage realistic expectations;
  • whether packages priced below a minimum cost threshold should be removed from the scope of the PTR, although recent statements from DBT suggest that this is unlikely.

While the potential changes the DBT is consulting upon are more limited than those proposed to the PTD, if they were to be introduced they would reduce the regulatory burden that the PTR place on package organisers.

A notable difference in approach

The PTR and PTD have faced several challenges since they came into force, most notably in the form of the pandemic and the collapse of Thomas Cook. However, despite the similar challenges, there is a notable difference in the UK and EU approach towards the reform of package travel legislation.

In the UK, government focus appears to be on taking advantage of Brexit freedoms and finding greater balance between consumer protection and burdens on business. The EU approach is quite different. Rather than seeking to reduce the regulatory burden on organisers, the EC seems instead to expect package organisers to take responsibility for resolving many of the challenges that arose during the pandemic.

We are still some way from any changes to the PTR or PTD taking effect. The EC reforms to the PTD must still proceed through the EU’s legislative procedure, while the UK is only in the consultation stage and specific revisions to the PTR have not yet been published. However, if the reforms largely reflect the proposals that are on the table, it would appear that we are heading towards a widening of the regulatory gap between the UK and EU.

This article was first written for ABTA’s Travel Law Today magazine (issue 17), which will be published at the upcoming Travel Law Seminar on 1-2 May. Luke Golding will be providing an EU focus on Package Travel Directive reform at the event. To find more information and register, click here

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