Package holiday changes to benefit millions of travellers

Millions of travellers are set to benefit from the biggest shakeup of holiday protection since the early 1990s.

The new EU Package Travel Directive, which comes into force on Sunday 1 July 2018, confers travellers with all the consumer protection that traditional package holidays have always provided.

For bookings from that date, online travel agents must take responsibility for each aspect of a holiday they sell in a single transaction.

The new rules widen the definition of a package holiday, making many more travel firms take responsibility for sorting out any problems.

But the travel industry is waiting to see if some agents will find loopholes to escape liability when things go wrong with a trip.

Organisers of package travel must ensure the holiday is as promised, “irrespective of whether those services are to be performed by the organiser or by other travel service providers”.

If the outbound flight is cancelled or severely delayed, or if the hotel is below the promised standard, the travel firm must address the problem and provide a refund if appropriate.

Until now, most online travel agents have disclaimed this responsibility by insisting they are merely offering a booking platform and saying: “Each product you choose creates a separate contract between you and the supplier of that product.”

One of the leading online travel agents, On The Beach (OTB), has been telling customers: “OTB, because we act as booking agent, accept no responsibility or liability for the acts or omissions of, or services provided by, Travel Suppliers.”

Therefore if a flight is cancelled because of strikes or bad weather, the traveller could lose the cost of the hotel. Alternatively, if the flight went ahead but the accommodation was clearly inferior to the quality offered, the holidaymaker could face having to take legal action in the destination country.

But new legislation, the Package Travel and Linked Travel Arrangements Regulations 2018, means that if a holiday is sold in a single transaction then the organiser must take responsibility.

A leading travel lawyer, Stephen Mason of Travlaw, said: “A new definition of ‘package’ will capture millions more arrangements which are sold, and thereby greatly increase consumer protection.”

To qualify as a package, the traveller must buy transport and another element such as accommodation, car rental or an organised tour.

Travel Republic, part of the Emirates Group, has changed its terms. The firm says that where it is obliged to pay compensation, provide assistance or make alternative travel arrangements, “We do so because we are obliged to do ... not because we have a contract with you to supply those arrangements”.

There are fears that the prospect of additional legal burden on online travel agents could trigger holiday price rises – or lead to some firms exploiting loopholes in the regulations to dodge their liabilities.

The new rules introduce a new concept, “linked travel arrangements” or LTAs, which provides much weaker consumer protection. Typically LTAs will involve buying a flight and accommodation in separate transactions with separate payments, or – after buying one element, such as transport – clicking through to book another travel product.

Mr Mason said the EU rules aim “to capture almost all combinations within ‘package’,” and that LTAs are a fallback “to ensure that some sort of financial security is provided to consumers”.

Agents are obliged to specify if they are offering LTAs.

Abta, the travel association, warns potential buyers of LTAs: “This is not a package and the level of protection is significantly lower than if you bought a package holiday.

“It comes with limited financial protection in case the company that sold it goes bust, but complaints about each holiday service will have to be taken up with the individual suppliers.”

One controversial element of the new rules is that holidaymakers win the right to cancel with a full refund in the event of “unavoidable and extraordinary circumstances occurring at the place of destination or its immediate vicinity and which significantly affect the performance of the package, or the carriage of passengers to the destination”.

Mr Mason said the effect of this provision is uncertain: “Is a terrorist attack in Paris ‘in the vicinity’ of Disneyland, thereby justifying consumers in cancelling free of charge, even when all the flights and hotels are operating? What about a hurricane approaching one Caribbean island?”

The new rules apply only to bookings made from 1 July 2018 onwards, not for holidays after that date which were booked earlier. They will continue to apply after the UK leaves the European Union.