At the end of 2023, the UK government’s Department for Business and Trade (“DBT”) held a call for evidence to inform its proposed reforms of the Package Travel and Linked Travel Arrangements Regulations 2018 (“the Package Travel Regulations”).
In launching the call for evidence, the DBT indicated its aim to decide whether the Package Travel Regulations strike the right balance between consumer protections and business freedoms. It focused on a number of key areas, including technical changes to simplify and clarify the legislative regime, the inclusion of UK domestic package holidays and changes to the concept of Linked Travel Arrangements (“LTA”).
Stewarts responded to the call for evidence and provided input into the Association of Personal Injury Lawyers (APIL) response, drawing on experience in representing individuals who sustain life-changing injuries when holidaying abroad whether with a UK-based tour operator or in other circumstances. Christopher Deacon outlines the details of the changes and our response.
Technical changes, including to the liability regime for tour operators
Liability to package holiday customers
The travel industry appears to be pushing the government to make fundamental changes to the liability regime under the Package Travel Regulations. This was not part of the DBT’s call for evidence. Any reform of the liability of tour operators to their customers for an injury during a package holiday must, therefore, be the subject of careful consultation with all stakeholders before any legislative changes.
Concerns from the travel industry follow the UK Supreme Court’s decision in X v Kuoni [2021] UKSC 34, where the luxury tour operator was found liable to its customer for a serious sexual assault by a member of staff at a hotel in Sri Lanka.
Kuoni had provided the hotel accommodation as part of a package holiday. The Supreme Court held that Kuoni did not have a defence where the act or omission giving rise to the claim is caused by the employee of a third– party supplier under the package holiday contract.
ABTA and its members have been quoted as expressing concern at the liability framework, suggesting they are “on the hook for anything that can happen on a holiday.” Lawyers representing claimants who are injured on a package holiday will appreciate the position is not so straightforward. The burden is on the victim to establish the tour operator has not provided services to an acceptable standard and that this has, in turn, caused the injury in question.
There should be nothing wrong, in principle, with a requirement for the party in a stronger position to ensure services offered as part of a contract with the consumer are provided and performed to an appropriate standard. It is a well-established principle of English law that this should be the local standard of the country where the holiday takes place, albeit there will be occasions where that is informed by international standards.
It is also difficult to see why a consumer who has purchased services from the tour operator should not be able to seek redress from that tour operator in the event of a serious injury. This reflects the context and spirit of a package holiday, where a wide range of holiday services are provided by the tour operator’s overseas supplier. Holidaymakers should expect tour operators to exercise a reasonable degree of diligence when selecting overseas suppliers to ensure the highest standards.
Seeking redress from third parties
The DBT’s call for evidence does include questions on the ability of tour operators to seek redress from third parties.
Tour operators are already in a stronger position than consumers when seeking redress from local suppliers under a package holiday contract. Tour operators should be well-placed to ensure their contractual arrangements enable pursuit of an indemnity/contribution where the tour operator has to pay damages due to the fault of the supplier, or whoever the supplier entrusts with the performance of its obligations under the supply of services agreement.
A more effective framework on third party redress would benefit both consumers and tour operators, as it may encourage tour operators to resolve claims with customers more promptly, knowing they have a reliable means of obtaining reimbursement from local suppliers.
Minimum price threshold
One of the most concerning proposals floated by the UK government was to set a minimum price threshold for the Package Travel Regulations’ protections to apply to a holiday booking. There is no evidence that a package holiday’s cost is indicative of either the tour operator’s ability to perform the contract or compensate the consumer. Equally there is no evidence to indicate that lower cost packages have any lesser risk and should, therefore, be unregulated.
Helpfully, it appears that this proposal has been met with wider concern. Speaking at the ABTA Travel Finance Conference in February 2024, Craig Belshaw, DBT assistant director for consumer policy, hinted that the government is unlikely to pursue this aspect of reform.
Both Stewarts and APIL argued that setting a minimum cost threshold would disproportionately affect those on lower incomes and/or who are otherwise vulnerable. Those booking cheaper package holidays may have less capacity to absorb a financial loss, either because of a life-changing injury on a package holiday or following a tour operator’s insolvency.
Many on lower incomes will be younger, which is likely to influence the type of package they purchase, and they should not be arbitrarily excluded from the rights and protections available under the Regulations. Indeed, depending on the medical evidence in view of the nature of the injuries they have suffered, younger claimants may be more likely to have a long life expectancy and so require compensation to sustain them for many more years, further highlighting the importance of comprehensive protection under the Regulations.
Compulsory insurance for UK tour operators
Stewarts and APIL took the opportunity in their response to reiterate the need for compulsory insurance for travel organisers. The 2019 collapse of Thomas Cook revealed that even large travel organisers fail to carry sufficient public liability insurance. Despite promising action then, the UK government has failed to ensure that all package operators hold sufficient insurance to prevent seriously injured people being left uncompensated and reliant upon the state for care. The proposed reforms to package travel legislation provide an opportune moment for the government to make this change.
Removal of domestic package holidays
The proposal to remove certain protections from UK-only package holidays would be detrimental to consumers. We understand the DBT is still looking at this proposal, but with an expectation that protections will remain for domestic package holidays that include transport.
Different regimes for domestic and overseas package holidays would likely lead to confusion. Any changes should carefully weigh-up the limited gains to the travel industry when compared to the significant detriment to consumers.
The UK government has suggested that any protections lost by amending the Regulations could be provided to consumers in alternative ways, notably where a holiday is booked using a credit card. Whilst that may currently be the case, ongoing proposals to reform the Consumer Credit Act (CCA) 1974 mean it is far from clear that the protections currently afforded by this legislation will remain.
More fundamentally, not all consumers will have a credit card and many that do are unaware of the difference in financial protection between a credit and debit card. Any reform to the framework for package travel legislation must be done with wider reforms to consumer protection and the CCA in mind, and vice versa, to avoid inadvertently removing important protections for consumers.
Linked Travel Arrangements (“LTA”)
LTA have not been successful, with nearly a fifth of consumers not understanding the limited nature of the protections they provide. It is not always straightforward for consumers to understand when they have booked an LTA, as opposed to a package holiday. Concerningly, consumers often believe an LTA affords the full protection of the Regulations, when in fact they do not.
In proposed amendments to the Package Travel Directive published in November 2023, the EU offered a new definition of an LTA: a booking that does not fall within the definition of a ‘package’ and is made when a trader has concluded a contract with a consumer for a travel service, invites the consumer to book an additional travel service from another trader for the same trip/holiday and that further contract is concluded at the latest 24 hours after the confirmation of the booking of the first contract.
This remains a minefield, with practical and legal arguments that could retain the existing uncertainty and confusion around an LTA.
The UK government could go further than the EU by removing the concept of an LTA and extending the definition of a package holiday to include arrangements that fall within the current definition of an LTA.
If LTA are to remain part of the UK legislation on package travel, a simple definition is required to make it expressly clear to consumers when they are booking holiday or travel arrangements that do not include the same rights and protections as a package holiday.
Other tourist services
The DBT asked for views on the definition of ‘other tourist services’ and how they influence whether a package holiday has been created, and if those services form part of the package holiday contract. Stewarts and APIL consider that ‘other tourist services’ should remain within the definition of a package holiday under the Regulations. These additional services are as likely to cause harm to a consumer as any other feature of a package, perhaps more so given they often extend to hazardous holiday excursions.
As FOCIS (the Forum of Complex Injury Solicitors) noted in its response to the call for evidence, consumers rely on the travel organiser they are booking with to ensure local providers of other tourist services are reputable, have adequate insurance coverage and conduct suitable risk assessments to ensure the consumer’s safety. Consumers must be able to seek redress from the tour operator in relation to other tourist services, particularly where they may not even know the identity of the local supplier of such services.
If a complex definition is included to determine whether ‘other tourist services’ form part of the package holiday contract, such as the current ‘significant proportion’ or ‘essential feature’ criteria, any confusion must be determined in the consumer’s favour based on their perspective of this service’s importance when deciding to book a given package holiday. Given the travel industry’s approach to marketing these services as part of package holidays, a straightforward and inclusive approach will benefit both consumers and tour operators.
Business travellers
There does not appear to be a rational, evidence-based reason for the removal of business travellers from the definition of ‘traveller’ in the Package Travel Regulations. Any distinction between those travelling for leisure and business is arbitrary and, by excluding a whole class of individuals from protections offered by the Regulations, may leave them with no effective means of redress in the event of serious injury overseas.
Concluding thoughts
The UK government has indicated that it intends to retain the key safeguards of consumer protection that underpin the Package Travel Regulations. Future reform provides an opportunity to enhance consumer protection by extending the definition of a package holiday to include bookings currently classed as an LTA, and by ensuring all services booked with a tour operator form part of the package holiday contract.
Whilst recognising the importance of assisting the travel sector’s recovery from the pandemic, a balance must be struck with maintaining consumer confidence and protections. Too heavy a focus by the UK government on enhancing flexibility for the travel industry risks adversely affecting consumer rights, which in turn could damage the industry’s growth and prosperity.
The EU has published its proposal to amend the Package Travel Directive. Brexit allows the UK to diverge from the EU, but it is questionable whether such divergence will be welcomed given many UK tour operators also sell into the EU and will end up subject to separate legislative regimes depending on where the customer is based. The UK government may therefore wish to keep a close eye on how package travel legislation reform evolves as the EU moves towards adopting the proposed Directive.
Feedback on next steps from the UK government is expected in April 2024.
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