CANCELLATION charges imposed by tour operators are coming under increasing scrutiny as the Office of Fair Trading steps up its investigation following an increasing number of complaints from consumers.
The move follows the implementation of the European Union Directive on Unfair Terms and Customer Contracts in the UK. The directive is there to protect consumers from being put at an unfair advantage through the booking conditions imposed when buying consumer goods like holidays.
ABTA chief executive Ian Reynolds said representatives from the association had recently met with OFTofficials to discuss the issue. “I believe they will be pursuing the cases with more vigour in future,” he said.
The whole issue of cancellation charges has been a bug-bear of the Consumers’ Association Holiday Which? for some time.
The CA believes there is an imbalance between the amount tour operators charge customers who cancel their holidays and the level of compensation tour operators are prepared to pay out when they are forced to change or cancel customers’ holidays.
The CA principal lawyer Jackie Hewitt said: “Some operators charge up to 100% of cancellation fees sometimes up to two to three weeks before departure when in most cases the holiday can be resold.
“The scale of charges is not equal to the often small administration costs the operator incurs.”
Another gripe is what the CA sees as an imbalance between the terms and conditions for cancellations for the consumer and the tour operator.
“The tour operator can cancel for many reasons right up to the final day of departure and only have to refund the holiday cost and offer a small amount of compensation when the consumer has to pay up to 100% of the holiday cost.
“There is also the disappointment for the consumer who has already taken the time off work.”
ABTA provides model terms and conditions for tour operators, which include guidelines on cancellation charges when producing their brochures. But the level of the charges imposed is seen as a commercial issue.
Thus ABTA members have their own sliding scale of charges which differ from tour operator to tour operator. For example, Airtours has a different grading scheme in place to rival Thomson.
Airtours charges 100% cancellation fee for holidays cancelled between one and 21 days of departure, whereas Thomson retains 90% of the holiday cost or deposit for a cancellation of between one and 14 days (see table).
Airtours deputy managing director Richard Carrick said it did not make comparisons with other operators. “We do not see it as a competitive issue.”
He defended the current charges, saying they were based on the economics of running a tour operator.
“The industry operates on a 90% plus load-factor which enables us to price the product accordingly.”
While he admitted there was a greater chance of a tour operator reselling a holiday in peak season, he said the charges for cancellations had to be based on the risks incurred over the whole season.
He said the contracts of sale for a holiday had to be very different from other consumer products such as electrical goods and should therefore be judged accordingly.
“You cannot just put a holiday back on the shelf.”
Thomson
Number of days notice Amount customer must pay
More than 42 days Deposit
29-42 days 50% of holiday cost
or deposit if greater
15-28 days 60% of holiday cost
or deposit if greater
1-14 days 90% of holiday cost
or deposit if greater
0 The total cost of your holiday
Airtours
Number of days notice Amount customer must pay
More than 42 days Deposit
29-42 days 50%
22-28 days 60%
1-21 days 100%