Adding travel services to a package – Does it make you an organiser?
Travel lawyers like nothing more than cogitating on knotty legal problems, which is why such joy can be taken from the Package Travel and Linked Travel Arrangements Regulations 2018 (PTR).
The latest gift is this: if a travel agent sells a package holiday as a retail agent, but at the same time sells an additional travel service, does this create a new package for which the travel agent is the organiser – a Package Plus?
The customer may well ask for airport accommodation to be booked alongside the package holiday, perhaps because of an early flight. Similarly, the customer might ask for transport to be arranged from his/her home to the point of departure of a cruise (which, in itself, is a package).
In these situations, the travel agent will sell the package and the additional travel service as a retail agent in the expectation that the principal and the organiser of the package will be a third-party tour operator and the principal of the additional travel service will be the airline or hotelier. However, there is a question as to whether these transactions give rise to a new package, for which the retail agent is the organiser.
If the travel agent is the organiser of a Package Plus, then the consequences for the travel agent will be draconian. The travel agent will need to provide insolvency protection for the entire Package Plus, which will mean applying for an ATOL if the Package Plus includes a flight. The travel agent will also become liable for the proper performance of all travel services included in a Package Plus, even though the travel agent is unlikely to be in any position to exert legal or commercial pressure on a supplier to rectify a problem. The reality is that it would be far better for the tour operator of the original package to be responsible for fixing problems with this part of the booking, particularly where the tour operator either charters its own flights or is part of a group that includes the airline.
The simple answer to the question, however, is no, a Package Plus is not formed in the example above. This is because all six new “package” definitions in the PTR require the combination of two or more different “travel services”. A travel service is defined as carriage of passengers, accommodation, car hire or any other tourist service. Importantly, a package is not listed as a type of travel service. Accordingly, the combination of a package and another travel service (e.g. accommodation) does not satisfy the definition of a package.
Many will not like this simple answer and may seek to challenge it on the basis that a customer is likely to think that he/she is buying a Package Plus. As a result, it might be said that the original package should be treated as a collection of travel services which, together with the additional travel service, should be analysed in the usual way by asking whether there is a combination of two or more travel services. However, there is no clear legal justification for this approach and it would drive a coach and horses through the traditional view of a package, which is that it has its own legal identity that is separate and distinct from its components. Also, let us not forget that the PTR contains extensive pre-contractual information obligations on both the organiser and the retailer. The customer should therefore be in no doubt as to what the package does and does not contain.
This is not new ground. A similar issue existed under the old ATOL regulations (the Flight-Plus Regulations). These regulations defined Flight-Plus as the sale of a flight plus accommodation and/or car hire (Reg 24(1)). Again, a package was not listed as a component that could form part of a Flight-Plus. However, the regulations included a specific regulation that stated that the sale of a package and another component should be considered a Flight-Plus (Reg 24(3)). This option was open to the EC and the Government when drafting the new PTR – they could have said that a combination of a package and another travel service would lead to the creation of a Package Plus. Both decided not to.
In addition to the legal issues set out above, there are practical problems associated with the existence of a Package Plus. For example, the tour operator of the original package will already have fulfilled its obligations as an organiser under the PTR, not knowing that the customer might buy an ancillary product from the travel agent at the time of purchase. Through its marketing materials and/or terms and conditions, the tour operator will have identified itself as the organiser, and will have explained the legal rights of the customer (including in relation to insolvency protection) vis-à-vis the tour operator. All these disclosures will be false and misleading if, in fact, the travel agent is the organiser.
The regulators have not (yet) published any guidance on how they see the issue of Package Plus. It does not feature in the guidance published by BEIS, nor, at the time of writing, has the CAA given its view. Whatever the regulatory position, this is an issue that is not likely to go away and will end up in the courts when a tour operator or a single component supplier fails, and the only viable target for a customer claim is the travel agent.
Agents would be well advised to ensure that they are well prepared for this eventuality. It will be important to demonstrate that the customer was informed about which components were included in the package, which were not, and the status of the various parties in the sale (ie the identity of the tour operator, the single component supplier and the status of the agent). Agents should also take steps to assess their potential exposure to such claims and ensure that any assumed insurance cover will actually meet such liabilities.
Rhys Griffiths is a partner with Fieldfisher. He can be contacted at Rhys.Griffiths@fieldfisher.com
[This article first appeared in Travel Law Today published by ABTA]