BUSINESS NEWS e surprised’ tions, which came into force a year ago. Griffiths is a partner and head of travel at Fox Williams


Linked Travel Arrangements LTAs have not proved as interesting as industry lawyers hoped they would be. By the time the PTRs came into


force, it was well understood that there are two types of LTAs and that insolvency protection only applies to the money a company takes – not that of providers of other linked products. Perhaps those most significantly


affected have been airlines, given that many have affiliate relationships with accommodation and/or car hire websites and their customers are cross-sold to third-party websites in booking confirmations. While the airlines did not like


LTAs, and neither did their affiliates, compliance has not been particularly difficult. Given the airlines are paid commission on the number of customers who ‘click through’ to book accommodation or car hire with their affiliates, there were already systems in place to track this data. Adjustments to these processes enable the number of LTAs sold to be identified and confirms the level of insurance required.


Place of establishment Te PTRs introduced ‘place of establishment’ rules intended to liberalise the EU package market. A travel company established in


any EU state is now allowed to sell in any other member state using the insolvency protection scheme of its ‘place of establishment’. It was argued this would allow


UK Atol-holders to sell holidays to customers across the EU without worrying about having to arrange insolvency protection in each market. Te place-of-establishment rule has certainly simplified cross-border


travelweekly.co.uk One issue that remains unresolved is where a


customer books a third-party package and an ancillary such as overnight accommodation or a flight


selling of package holidays. However, it’s not perfect and there remain complications. Te EU Package Travel Directive,


on which the UK’s PTRs are based, allowed member states to broaden insolvency protection requirements if they wished and some have adopted this approach. For example, France requires retailers as well as organisers to arrange insolvency protection and individual travel services must be protected. So, while a UK-established company can rely upon its Atol to protect (flight-inclusive) package sales to French customers, it has to make ‘top up’ arrangements for the French market if it is retailing third-party packages or individual travel services. We are leſt with an inconsistent


regulatory environment. Companies wishing to sell across


the EU must ascertain the legal position in each country and, where there are additional requirements, make separate arrangements. Alongside the place of


establishment rules, member states have retained a discretion to require travel companies based in other member states to register with a national authority. In France, a company selling


from the UK must register with Atout France and provide a copy of its insolvency protection and civil liability insurance arrangements. Tis is suboptimal for companies wishing to sell across the EU. Tey


must go to the time and expense of ascertaining which states have a registration requirement and engage local advisers to help with the registration if it is not straightforward. Travel companies trading


cross-border find they are still met with a patchwork of regulation. Te ambition of removing barriers to cross-border trade has not been wholly achieved.


Race to the bottom Te place of establishment rules led many to fear a ‘race to the botom’ – that travel businesses might leave the UK to seek cheaper insolvency- protection solutions elsewhere. But we have not seen a mass


exodus from Atol. Te Atol badge is perceived to be important and something UK customers value. Also, it’s not easy to move. To sell


from another member state, a holiday business must have the centre of its operations in that state. Tis is not easy for a company long established in the UK. Ironically, the place-of-


establishment rules have hindered companies selling cross-border when they would prefer to use the insolvency protection rules of the place of sale. Local insolvency protection


schemes in some countries are perceived to have a strong brand value. For example, some Spanish operators selling into the UK would prefer to do


so under the Atol logo. Similarly, some UK operators selling into the Nordic countries prefer local insolvency protection schemes because these are recognised more than Atol.


Package-Plus One issue that remains unresolved is where a customer books a third-party package and an ancillary such as overnight accommodation or a flight. Is this a ‘super-package’ for which


the retail agent is the ‘organiser’? Or is it a ‘package-plus’ – the sale of a package plus a (separate) ancillary? Tis is not an easy issue. If the


retail agent is the organiser of a ‘super-package’, that leaves the client with no package rights against the organiser of the original package. Tat is not a good outcome for a


customer because the agent may have litle commercial or legal leverage against a hotelier or airline responsible for a problem. Te customer will be leſt without effective recourse. However, the alternative is not perfect because if there is a problem with the ancillary, the customer will have to seek a remedy against the provider (the airline or hotelier). Overall, implementation of the


PTRs has surprised lawyers. Areas which were anticipated to have a significant impact have not turned out that way, while some of the perceived advantages have proved a hindrance. But it’s a new law, still in the early stages. We will see other issues emerge as the PTRs bed in.


Rhys Griffiths, Fox Williams: rgriffiths@foxwilliams.com


4 JULY 2019 71


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