The Department for Business, Enterprise and Regulatory Reform describes a traditional ‘package’ as being sold, or offered for sale, at a pre-arranged, inclusive price, which includes a minimum of two of the following elements: transport accommodation and other tourist services.
ABTA’s guidance is that if you only sell package holidays offered by tour operators (dynamically, brochured or tailor-made) then you are not a package organiser.
If you create packages by combining travel services, or tailor-make or dynamically package holidays and charge a single inclusive price, then you are a package organiser.
Package organisers need to comply with the Package Travel Regulations 1992 (including being responsible to consumers for proper performance of obligations, even by suppliers).
If packages include flights, financial protection must be provided under an ATOL licence.
Travel agents should be careful if selling ‘split’ holiday components as dynamic packages without any form of consumer protection: it could expose them to risk.
Traditional tour operators generally have an ATOL licence and insurance to cover its liabilities to customers under the PTRs.
An ATOL licence or alternatives, such as the Travel Trust Association’s method of financial protection for split contracting or separate bonding arrangements or insurance policies, may be required in order to meet liabilities to consumers.
Advice from a tax specialist on whether selling components of travel arrangements are within tour operator VAT schemes should be obtained.
Travel businesses should consider using robust and interactive IT systems to enable easy access to booking details.
To give customers more confidence, you should have an ATOL bond, or bond through a trade body, or insure your customers’ money or pay it into a trust account, to protect consumers in the event of the company’s collapse.
Liability for providers selling dynamic packages is still undecided: a full legal challenge to a provider’s method of selling travel arrangements would help determine whether the dynamic package seller is liable to the consumer as a ‘package’ seller.
New guidance is required on what does and does not constitute a package to quash uncertainty. In the meantime, consider these factors and seek advice.