A new Package Travel Directive (PTD) will move responsibility for regulated firms from the country of sale to a company’s place of establishment, threatening to heap new risks and costs on financial protection if companies relocate to take advantage.
The UK government opposes the shift but has conceded defeat on the issue in Europe where the switch forms part of the PTD now being finalised by the European Commission, Council of Ministers and European Parliament.
Kate Jennings, head of aviation policy implementation at the Department for Transport (DfT), warned last week: “We aren’t expecting this to change now.”
She told an industry audience at the annual Travlaw Big Tent event in London: “The government position was that we didn’t support [this clause]. We thought the current approach, based on the place of sale, worked better. There was support for ‘the place of sale’ approach at the implementation level [ie among regulators] but at the political level, there was no support. There is a strong single-market ethos behind the proposal.”
Jennings conceded the change could bring risks. “There is a risk businesses will move to centres where protection is cheapest and not offer the level of protection UK consumers might expect. There is the opposite risk that an attractive regime [like the UK’s] could get a lot of companies moving in,” she said. If that were to happen, she asked: “Have we got the means to manage that risk?”
CAA head of Atol Andy Cohen agreed, saying: “Kate has set out the position. We organised a meeting of implementers who were all of a similar view, but it looks like we are staying with ‘the place of establishment’. It will be up to us to find a way of making it work.”
Jennings also identified a problem with the proposed definitions in the PTD. She said: “Most of what [we call] Flight‑Plus is in the package definition and we welcome the fact that there is some additional protection in the Assisted Travel Arrangement (ATA), but the UK position is not to support the current [ATA] definition. It only applies protection to the travel provider and not the other elements and we think that is confusing. We’re not happy with that.” The ATA will apply to so-called click-through web sales.
Abta chief executive Mark Tanzer said: “Where someone starts on one site, say an airline’s, and through targeted marketing or transfer of data moves to another – say an accommodation site – we see that as a package. The Council sees it, at best, as an ATA which does not require package protection.”
However, Tanzer added: “It is a step forward from where we are now.”
Industry accountant Chris Photi, of White Hart Associates, suggested: “Whether it is good or bad depends on who you are in the industry. A travel agent maybe won’t feel it’s a good thing.” He said: “The PTD needs to be revamped; the regulations are out of date. But does the consumer need this level of protection when they pay with a credit or debit card?”
Photi added: “It worries me that the UK has a Rolls-Royce protection model when you see what other countries offer.”
Jennings said: “Our working assumption is that the PTD will be agreed by May, be published in June and we’ll do a consultation this autumn.
“We’ve not decided on one or two consultations. My personal view is we could do one. It’s not clear yet whether it will require primary legislation.”
New Atol Regulations could be expected in spring or autumn 2016 and come into force in 2017, with companies allowed six months to adapt.