Deloitte Legal partner Farina Azam assesses the legal implications of a destination moving from amber to red, and FCDO advice
The introduction of the traffic light system heralded the restart of international travel for the UK. However, with the rules being reviewed every three weeks, destinations can be ‘downgraded’ or ‘upgraded’ at relatively short notice.
This is a particular issue where a destination changes from amber (currently quarantine-free for fully-vaccinated arrivals into the UK) to red (10-day hotel quarantine irrespective of vaccine status).
So, are customers entitled to a refund if their holiday destination moves to the red list before departure?
Ultimately, it will come down to whether their holiday can still be performed as contracted, and whether the FCDO advises against travel to the destination.
If the holiday can still be performed as contracted, ie. the flight hasn’t been cancelled and the hotel and resort are still open and accepting tourists – and the FCDO doesn’t advise against travel to the destination – then there is no trigger under the PTRs for a refund.
There is, however, still an argument that customers could be entitled to a refund on the basis that the contract they entered is now fundamentally different as a result of the additional requirement to quarantine (especially in the case of hotel quarantine for red list countries).
However, since this is a contractual issue – it could potentially be managed in the contract with the consumer by including some clear and prominent wording in the terms and conditions.
So, if a customer must quarantine upon their return to the UK, it does not entitle them to cancel their holiday and receive a full refund under the PTRs.
FCDO advice
The situation differs where the FCDO advises against non-essential travel to the destination, and this would more than likely give rise to a refund (unless the customer has made an informed decision to travel to a destination even though the FCDO advises against travel, and this is documented in the contract with the customer).
It is likely that, if a destination is considered so high-risk that it is on the UK’s red list, the FCDO will also advise against travel to that country, but this should still be checked for each individual country.
The Competition and Markets Authority (CMA) stated in its latest open letter to the industry that they take the view that FCDO advice against non-essential travel to a destination is “compelling evidence” of extraordinary and unavoidable circumstances occurring at the holiday destination, or its immediate vicinity, which significantly affect the performance of the package or transport to the destination – and thereby gives rise to the right to a full refund should the customer wish to cancel their holiday.
It’s worth noting that this is consistent with the view taken by the European Commission in its March 2020 guidance on how the Package Travel Directive 2015 should be interpreted in light of Covid-19.
If a package organiser disagrees that a customer is entitled to a refund, the organiser is expected to fully explain to the consumer why they disagree and provide detailed information on the evidence they are relying on to make this decision.
Considering implications
Irrespective of the legal position, some consumers may expect a refund from their travel company if they wish to cancel their holiday due to a new requirement to quarantine upon their return to the UK.
As such, travel companies need to consider both the commercial and reputational implications of their refund stance and not just the legalities.
Where a travel company refuses a refund (and is legally entitled to do so) the customer could be offered a credit note instead, or the opportunity to transfer their place on the trip to another person (which is a right customers have under the PTRs).
Travel companies must ensure that a customer’s options in the event they wish to cancel their holiday are included clearly and prominently in its contract with the customer, and that the terms and conditions are legally compliant.