Reform of PTRs must be completed by June next year

Reform of the Package Travel Regulations (PTRs) must be completed by June next year, with changes finalised by this December or the process will run out of time.

Andrew Powell, senior policy advisor at the Department for Business and Trade (DBT) which is consulting on reform proposals, revealed the time pressure when he spoke at the Barclays Travel Forum in London on Tuesday.

Powell said: “We can’t do a lot. Time is quite short. Legislative powers under the Retained EU Law Act expire in June 2026 and any legislative change needs to go through both houses of Parliament. We need to have everything finalised by December.”

He explained the time pressure meant the consultation launched in April and now underway “was slimmed down” from the proposals in a DBT Call for Evidence on reform in late 2023 “to focus mostly on a domestic [package holiday] exemption and mix and match [bond and trust arrangements] on financial protection”.

Powell told Travel Weekly: “If we run out of time we would need to find another regulatory lever.”

Rachel Jordan (pictured), Abta director of membership and financial protection, questioned how the proposal to allow a mix of bonding and trust accounts to provide financial protection would work.

She said: “The majority of Abta members are supportive of greater flexibility, but how you achieve that is potentially quite challenging.

“It would be worrying if businesses could set their own bonding level, although we understand that is not the intention. But you start to realise the complexities when you look at how this would work. In the event of a failure, who acts first – the bond or the trust? If there is a shortfall [in funds], who pays out?”

Jordan said: “Abta does not want to monitor trusts, and we’re not going to employ people to monitor trusts.”

She also noted: “We saw with Covid that financial service providers exited the market. What if a provider withdraws?”

Jordan added: “When financial failure insurance ends, it ends. But a bond has a run-off period. Also, we don’t how [insurance] protection would be priced. Would it be cheaper?”

She pointed out a package organiser “would be paying two different premiums and two different fees” and said: “It’s more complicated than it would initially seem.”

However, Sudheer K Sharma, chief executive of PT Trustees, insisted: “The hybrid model [of bonds and trust accounts] does work. We have a number of successful examples. The beauty of the hybrid model is we capture all the data and handle 100% of the risk. It just so happens some of it is covered by a trust and some by a bond.”

He added: “The hybrid model is not necessarily more expensive. All travel companies have the data. It’s just how they manage it.”

In the event of a failure, Sudheer said: “It’s not very complicated. The quality of the data we hold allows anyone to step in. With [an Atol failure] the CAA takes over and handles everything.”

Jordan agreed: “Sudheer’s technology is impressive.” But she said: “Data quality is key, and I’ve seen other data that raises a lot of questions.”