Ian Skuse is a partner and head of Piper Smith Watton LLP’s Aviation, Travel & Tourism department. Piper Smith Watton LLP (www.pswlaw.co.uk) is a business and private client law firm based in Westminster
BUYER AWARE
New guidance from the OFT and CAA gets tough on travel industry transparency issues
DURING NOVEMBER 2012, draft guidance was produced by the Office of Fair Trading (OFT) and Civil Aviation Authority (CAA) for the travel industry, setting out key requirements and likely breaches of various regulations applicable to flights and holidays. The draft guidance is subject to a short period of consultation before publication, and covers the following areas:
AIR SERVICES REGULATION EC REGULATION NO 1008/2008 Article 23(i) of these regulations sets out a number of legal obligations relating to the display of prices for air tickets, including that the price shown must be a final, all-inclusive price, including all unavoidable and foreseeable taxes, fees and charges.
CARRIER IDENTITY REGULATION EC REGULATION NO 2111/2005 These apply to airlines, tour operators and ticket sellers and obliges them to inform the passenger of the identity of the operating carrier, whatever the means used to make the reservation – and if the identity of the carrier is not known at the time of the reservation, the passenger must be advised who it is likely to be.
CONSUMER PROTECTION FROM UNFAIR TRADING REGULATIONS 2008 These prohibit unfair commercial practices, and the OFT/CAA will consider these to be breached if the trader fails to pass on the consumer’s data to the final supplier, fails to have a proper complaints system, or presents prices in a confusing way or misleads the customer. The regulations create criminal offences, examples of which are
giving inaccurate details about the degree of any financial protection, and concealing any exclusion clauses.
UNFAIR TERMS IN CONSUMER CONTRACTS REGULATIONS 1999 These apply to contract terms that have not been individually negotiated between businesses and consumers. The regulations define ‘unfair terms’ which are unenforceable, such as disclaimers of liability, terms unreasonably restricting the customer’s right to a refund and terms imposing a disproportionate penalty on the customer if they cancel the contract.
THE ELECTRONIC COMMERCE (EC DIRECTIVE) REGULATIONS 2002 These relate to any business that markets or sells electronically by internet, email or text for payment at a distance and by means of electronic equipment. Certain information must be given before a contract is concluded – including the name and address of the business, VAT number and whether pricing includes taxes and delivery costs. The communication to the customer must include the steps to be followed to conclude the contract and any applicable code of conduct.
The OFT has confirmed it is likely to consider prosecutions for persistent and flagrant breaches by the travel business or if deceptive, misleading or fraudulent practices are involved. There is a statutory defence if the business can show that the committing of any offence was due to a mistake or reliance on information supplied by another, or that it had taken all reasonable steps and exercised all due diligence to prevent the offence being committed.
The draft guidance serves as
a reminder that regulators and prosecution authorities see the travel sector as an area of potential non-compliance. This has been the case since the ‘unbundling’ of tickets, with customers only discovering the final cost at the end of the booking process. Those involved in the marketing of travel need to be familiar with these regulations, and have due diligence systems to ensure compliance.
DURING NOVEMBER 2012, the European Union (EU) indicated that the Emissions Trading System (ETS) rules requiring airlines to pay for their carbon omissions for flights into and out of the EU would be partially put on hold, following threats of international consequences and a potential trade war. During the period that the scheme is on hold, international talks will take place to try to tackle the issue of airline emissions. Meanwhile, ETS will apply to flights within the EU, putting European airlines at a disadvantage.
SKYTRAX provides an airline rating system with customer reviews for airlines based upon information said to be gathered from a large number of passengers. During November the Advertising Standards Authority (ASA) launched an investigation, and indicated that Skytrax could not review the sources of information following a 24-hour period and could not, therefore, show the verification process required to check reviews were genuine. The ruling advises that Skytrax cannot imply that the reviews on the site had been checked unless this could be substantiated. The adjudication by the ASA
follows an earlier decision in February 2012 relating to Trip Advisor on the issue of whether the reviews on its site were “reviews you can trust”. The ASA found that reviews could be placed on the site without any form of verification and, therefore, non-genuine content could appear undetected. ■