A leading industry lawyer has challenged travel retailers to defy the Flight-Plus Atol regulations, saying companies are “sleepwalking into compliance when they don’t need to”.
Field Fisher Waterhouse partner Peter Stewart told an Abta law seminar in London that a Court of Appeal judgment in 2001 leaves agents and online travel agents (OTAs) outside the Flight Plus regulations.
Stewart, who has a record of winning judgments against the Civil Aviation Authority (CAA), said: “The vast majority of companies are sleepwalking into compliance with the Atol Regulations when they don’t need to.”
The regulations bringing Flight-Plus sales into the Atol scheme came into force on April 30 and a month’s ‘transition period’ during which companies are expected to comply ends on Friday (June 1).
Stewart said: “The common view is Flight-Plus brings in agents and OTAs. I don’t think so.”
He pointed out the regulations use the phraseology of the existing Package Travel Regulations in defining “a Flight-Plus arranger” as one “who makes available flight accommodation”.
Stewart said an Appeal Court judgment in the case of the CAA v Jet Services Ltd (2001) found that “to make available flight accommodation” could not be separated from “the ability to provide flight accommodation or right to dispose of it”.
He said: “Agents and OTAs do not have the ability to provide flight accommodation. If they are not an authorised agent of an airline, they do not have the right to dispose of flight accommodation. My view is many people are not subject to the regulations. But they don’t want to fight the CAA.”
However, he said: “There are other ways to a get around the Atol regulations.”
Acting as an agent for the consumer is one way, Stewart said, but he did not advise it. He argued: “It is realistic to assume the agent for the consumer route will disappear when the Civil Aviation Bill becomes law and new regulations are introduced. It is short term.”
Instead, he suggested relocating outside the UK. “If you are established in a European Economic Area (EEA) state other than the UK you do not fall in the regulations.” That means all EU member states plus Iceland, Norway and Lichtenstein.
Stewart said: “This is a complicated route, but a company could up sticks with its whole operation to a friendly state. I would look for a state with less-onerous financial requirements on agents and OTAs.
“You would have to do business from that state. To leave your operation in the UK would be fraught with risks. But if you had an office in Barcelona and were operating from there, you would be outside the Flight-Plus regulations. You could do flight only as a ticket-only agent or under the credit-sale exemption.”
Stewart told the Abta seminar: “Businesses can either stick with the increasing regulatory cost or take a punt on saving money. It depends on someone breaking ranks.”
He told Travel Weekly: “The ‘make available’ argument is serious. The CAA could prosecute or set out to change the regulations again. To defend a prosecution would become expensive and you would have to think about the cost of losing. But I think we would win.”
On moving out of the UK, he said: “The Atol Regulations envision people using offices in other countries. Previously, the incentive to move was less. Flight-Plus has changed the game. You could not do it overnight, but there is no reason you could not do it.
“My feeling is if one person goes, others will.”