WTM 2016: Extension of EU package protection ‘regulatory hospital pass’

Linked Travel Arrangements, a new category of travel due to come in under EU regulations in 2018, was likened to a ‘hospital pass’ from Europe by UK Atol experts at World Travel Market.

Speaking at a seminar on Atol changes co-hosted by Spanish bank Santander and the Travel Trade Consultancy, Martin Alcock, a TTC director, said the LTA definition is so “unworkable and confusing to the point of being laughable”.

He said it was clear from the latest Department for Transport consultation on Atol reform that the Government and the CAA “do not want to touch LTAs with a barge poll” and would rather they are protected by another market-based insurance and bonding scheme.

“The DfT wants I think for it to be passed into some sort of market solution to avoid confusion over what Atol does and does not cover,” Alcock said.

An LTA will be created if a second substantial travel product is bought linked to an original component via a click through from the first vendor’s website within 24 hours. However, it is not known how the second vendor is meant to tell the first that an LTA has been formed and that the holiday must now be financially protected. It raises the prospect that firms will end up having to provide protection simply due to relevant Google ads appearing on third party websites.

Alcock said the proposals for Atol reform post the application of the new EU Package Travel Directive in 2018 clears up another area of confusion in that it signals the death of Flight-Plus which he said “no one really understood what it was meant to cover anyway”.

Flight-plus Atol cover came in in 2012 and was the UK’s answer to expanding the scope of package protection in the light of the rise of dynamics packaging and component sales made at the same time but not pre-packaged at the point of sale.

Either Flight-Plus agents will have to accept they are selling full packages and accept the liability as such, or there is the possibility that they will alter their models and technology so their sales can be classified as LTAs, which require a lesser degree of protection than packages.

“LTAs are a mess,” said Alcock. “They are confusing. But I never underestimate the travel sector’s ability to be creative. There are companies out there who will make them work.”

Alcock said the new place of establishment rule in the PTD will mean UK firms will be able to more easily access overseas markets in Europe, but added it did raise the prospect of more situation like Lowcost Holidays which relocated to Spain to take advantage of a less rigorous and costly regulatory regime.

It is also unclear whether non-UK sales would be backed by the Atol Air Travel Trust that has accrued £150 million in industry money since 2012 and may have to be used to repatriate non-British holidaymakers in the event of a collapse. “Does that mean that the UK customer has to do more than just collect £2.50 [Atol Protection Contribution]?”

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