PI Newsletter August 2018 – Travel Edition

The Package Travel and Linked Travel Arrangements Regulations 2018 – practical pointers
By Rosalind Young and Michael Dougherty

Introduction

The Package Travel and Linked Travel Arrangements Regulations 2018 (“2018 Regulations”) implement the EU Package Travel Directive 2015/2302 (“2015 Directive”). Following consultation in April 2018, the 2018 Regulations came into force in the UK on 1st July 2018.

It is worth noting that the 2015 Directive was not the first of its kind. It replaced the 1990 Directive of the same name which was implemented in the UK under the 1992 Regulations.

There are a number of reasons why the 1990 Directive and 1992 Regulations were in need of review. The main driving force behind the 2015 Directive was the intention to close the loop hole created by technological advances which allowed consumers to combine and book different elements of a holiday through varying channels. The days were long gone of people purchasing holidays from brochures. Consumers were venturing beyond the traditional pre-arranged combinations of flights, hotel and transfers offered as a clear package, at a clear price. That type of service fell squarely within the 1990 definition of a package, ‘a pre-arranged combination of services when sold or offered for sale at an inclusive price’.  The advent of ‘dynamic packages’ however has necessitated legislative update in order to ensure continued consumer protection.

What are the effects of the new Regulations?
The effect of the 2018 Regulations is to bring an increasing range of holiday bookings into the classification of ‘package’. The Regulations do not have retrospective effect, and consequently apply to holidays booked on or after 1 July 2018. Holidays booked before 1 July 2018, even if taken significantly after that date, will not be captured by the new Regulations.

The definitions under regulation 2 envisage three types of arrangements:

•  A traditional pre-arranged package which is purchased ready-made from a trader and consists of at least two components;
•  A customised package where a selection of travel components is made by the traveller and purchased from a single business (both online and offline);
•  A linked travel arrangement.

What is a package?
Regulation 2(5) provides six different circumstances in which travel services are combined to create a package:

1. A combination created by one trader and sold under a single contract.
2. The selling of services in a single booking process, from the same point of sale (whether online or offline).
3. The selling of services at an inclusive total price.
4. The selling of services under the term “package” or similar.
5. Contracts incorporating subsequent choices (meal choices for example).
6. The selling of services through a linked online booking process (where online, and a traveller’s personal information is sent from the first trader to a second trader, with whom a further contract is concluded within 24 hours).

What constitutes a Linked Travel Arrangement (“LTA”)?
LTAs are travel combinations that have looser commercial connections and do not therefore constitute ‘packages’ under the 2018 Regulations. Travellers purchasing an LTA will receive some protection, however a trader facilitating the LTA will not be held liable for the performance of all the travel services that are part of the LTA. There will be some insolvency protection, but this will be limited in comparison to that which is afforded under a package.

The main characteristics of an LTA are as follows:
•  At least two different travel services are purchased for the same trip or holiday;
•  The separate selection and separate payment of each travel service;
•  The traveller has separate contracts with the service providers.

What the Regulations do not apply to?
a. Packages and linked travel arrangements covering a period of less than 24 hours unless overnight accommodation is included;
b. Packages offered, and linked travel arrangements facilitated, occasionally and on a not-for-profit basis and only to a limited group of travellers;
c. Packages and linked travel arrangements purchased on the basis of a general agreement for the arrangement of business travel between a trader and another natural or legal person who is acting for purposes relating to his trade, business, craft or profession.

The organiser and the retailer
Under Regulation 15, the performance of the package is the express responsibility of the “Organiser”. The Regulations distinguish between organisers and retailers (regulation 2).

Who is an organiser?
The organiser is defined as the trader who combines and sells packages – the trader who passes on the traveller’s name, payment details and email address to another trader to create a package.

When determining whether a trader is an organiser, it should make no difference whether that trader is acting on the supply side or presents himself as an agent acting for the traveller. Any trader who ultimately combines a package will be the organiser for the purposes of the 2018 Regulations.

Who is a retailer?
A retailer is a trader other than the organiser who sells or offers packages combined by the organiser. The retailer essentially is the organiser’s agent.

What duties are owed by the organiser and retailer?
The 2018 Regulations list the organiser and /or retailer’s main duties.

1. Under regulation 4, the organiser and the retailer owe duties to provide information.  Where a package is sold through a retailer, the organiser and the retailer must ensure that the required information, both before and after a package is sold, is provided to the traveller. They may decide between themselves who will provide this information to the traveller but must ensure that it is provided. Where a package is not sold through a retailer it is the organiser’s responsibility to provide the information.

i. Before the sale (regulations 5 and 6).
The retailer or organiser must provide travellers with specific information before selling them a package. This information includes: the main characteristics of the package; the total price of the package; the name and details of the organiser; the information on their cancellation policy. This pre-contractual information is binding and must not be altered unless the traveller expressly agrees. Any changes must be communicated in a clear and comprehensible way before the conclusion of the contract. This information has to be accompanied by standard information forms which vary depending on how the package is sold.

ii. After the sale (regulation 7).
Once a sale has been concluded the relevant person must provide the traveller with a copy or confirmation of the contract. This contract should contain the key information listed in Schedule 1 and 5 to the 2018 Regulations

2. Under regulations 15, 16, 17 and 18, the organiser and the retailer owe a duty to remedy any lack of conformity.

i. The organiser is required to remedy any lack of conformity with the contract within a reasonable period which is set by the traveller. Under regulation 16 however, travellers will not be entitled to compensation for damages if the organiser can prove that lack of conformity is:

•  attributable to the traveller;
•  attributable to unforeseeable or unavoidable actions of a third party not connected to any of the travel services included in the package;
•  due to unavoidable and extraordinary circumstances.

ii. Where a significant part of the contract cannot be performed, the organiser is under a duty to offer alternatives at no extra cost, which where possible, ought to be of equivalent or higher quality than those specified in the original contract.

iii. Under regulation 18, if a traveller is in difficulty during their package holiday, the organiser is obliged to give appropriate assistance without delay.

iv. Under regulation 17, if the traveller chooses, they may treat the retailers as a point of contact for travellers in respect of messages, complaints or claims relating to packages they have sold on behalf of organisers.

3. Duties also arise in relation to changes, cancellation and termination of a package.

i. Under regulation 9 the organiser may only alter the price of a package travel contract if that possibility has been reserved in the contract, and the change is a consequence of one of the following specific reasons:

•  Increase in transport costs due to changes in fuel prices or other power sources;
•  Changes in taxes or fees on travel services imposed by third parties not involved in performance of the package;
•  Exchange rates relevant to the package.

ii. Under regulation 11 organisers must not unilaterally change the terms of the contract before the start of the package except for insignificant changes permitted by the contract and communicated to the traveller.

iii. Under regulation 13 an organiser may terminate the contract without paying a termination fee and / or being liable for additional compensation in the following situations:

• When the minimum number of participants is not reached (the minimum number must be stated in the package travel contract and the organiser must notify travellers of termination within the period fixed in the contract)
• When the organiser is prevented from performing the contract because of unavoidable and extraordinary circumstances, in which case the organiser must notify the traveller as soon as possible.

4. The organiser is also under a duty to obtain insolvency protection. That insolvency security should cover the reasonably foreseeable costs of, and prompt return of, all payments made by the traveller for services not performed. These obligations are set out in full under regulation 19.

What duties are owed by the traveller?
1. Under regulation 9 travellers have the option to transfer a package travel contract to another traveller who satisfies all the necessary conditions for the holiday if they give the organiser reasonable notice.
2. Under regulations 12 and 14 the traveller may terminate a package any time before the start of the package but, if he / she does so, he / she may be required to pay an appropriate and justifiable termination fee to the organiser, taking into account expected cost savings and income from alternative deployment of travel services

What about Brexit?
It is still unknown how Brexit will impact the scope and application of the 2018 Regulations. It should be noted that the Regulations can apply to organisers and retailers who are not established in the UK. A package can be sold or offered in the UK regardless of where the seller is established. Apart from distinctions made in relation to insolvency protection, no distinction is made between traders based in the UK, elsewhere in the EU, or outside the EU.

One would hope that negotiations will lead to British companies maintaining the rights and benefits of selling packages cross-border.

Fixed recoverable costs?
It should be noted that the 97th Update to the Civil Procedure Rules implements the introduction of Fixed Recoverable Costs for package travel disputes. These new rules relate to claims for gastric illness only and apply to claims notified on or after 7 May 2018. A new Pre-Action Protocol has also been introduced for package travel illness claims.