International Travel Law Network conference:Lawyers from across Europe d Continued from page 48
there were no new bookings. That let the business run its course. [But] when the CMA decided to prosecute, it wasn’t possible to continue.” Truly operated profitably
pre-Covid, reporting a £1.35 million profit for the 12 months to October 2019 and £2 million the year before. But it borrowed what a source described as “a sizeable sum” not long before Covid which meant “it could not raise further funding”. It was not able to raise a government Coronavirus Business Interruption (CBIL) Loan. It also could not benefit fully from the UK furlough scheme as it operated from India. “It was disadvantaged, and
it came to the top of the CMA list,” said the source. The CMA began investigating
Truly in February 2021 and threatened legal action in April. Truly signed formal undertakings to refund customers in May and managed to pay most of the refunds, helped by a £4 million VAT payout stemming from its purchase of Alpharooms in 2016. But that left £1.2 million in refunds outstanding, according to the CMA, which took legal action on October 18. Within days the Travel Trust
Association (TAA) announced Truly had left the group and the TTA would fulfil its Atol bookings. Truly went into liquidation on December 2. That same October, the CMA
closed a probe into whether airlines “broke the law by failing to offer refunds for flights during periods of lockdown” saying “the law does not provide a sufficiently clear right to a refund . . . to justify continuing”.
UK’s timeframe for right to refund ‘less than Europe’s’
The right to a refund on cancellation of a package holiday in the UK typically kicks in only days before departure, but that is not the case across Europe. Travlaw senior counsel Stephen
Mason said: “How close before departure does a consumer have to wait before cancelling? In the UK, a consumer is not entitled to cancel until late – a few days before departure – because how can you
say it’s not possible to travel until near the time?” His colleague Nick Parkinson,
Travlaw senior associate, agreed: “You have to wait to cancel until travel is imminent.” He told the International Travel Law Network conference: “We’ve had a large number of claims like this, with consumers cancelling holidays too soon, and not seen any reach the courts.” Parkinson noted: “The regulations
don’t give any indication of the time [and] consumers do need some clarity. They need to know when they can cancel and get a refund. It seems customers should wait until nearly the last minute unless it is absolutely clear a holiday can’t proceed.”
Nick Parkinson
However, Klaus Siebert of
German law firm Engels-Siebert said: “The German courts have a different view.” He reported cases where “customers tried to cancel six months or five to six weeks before travel” and said: “If there is a six-to-eight-week prognosis, you might cancel cost-free.”
Pandemic tests clarity of PTR cancellation liabilities
The pandemic has highlighted uncertainties about holiday organisers’ liabilities under the Package Travel Regulations (PTRs) for cancellations due to “extraordinary circumstances”. Stephen Mason, senior counsel
at Travlaw, noted an ambiguity in Article 12 of the PTRs which gives a traveller the right to cancel a package and obtain a full refund “in the event of unavoidable and extraordinary circumstances at the place of destination or its immediate vicinity”. The wording, which comes from
the EU Package Travel Directive (PTD), states these cancellation and refund rights apply where these extraordinary circumstances “significantly affect the performance of the package or the carriage of passengers to the destination”. Mason told a conference of the
International Travel Law Network: “The question is whether the cancellation of carriage [a flight] to a
46 17 MARCH 2022
Stephen Mason
destination only applies if the flight was booked as part of a package. [What if] the consumer booked their own flight and the package only began after their arrival in the destination?” Michael Wukoschitz of Vienna-
based law firm KWC noted: “[The PTD] makes a distinction between circumstances in destination affecting the performance of a package and circumstances affecting the carriage. It doesn’t mean the flight has to be part of the package.” He suggested “it’s unfair to the
package organiser” but added: “The wording refers to all passengers, so it doesn’t apply to a certain flight, only if there is no carriage [flights] at all. The passenger shall be entitled to a full refund of the package but not compensation, so there is no right to a refund of the flight.” Klaus Siebert, partner at law firm
Engels-Siebert in Dusseldorf, said: “I support that interpretation. [But] we had up to 700 cases [in Germany] where passengers booked a package, made their own flight plans and, due to a cancellation, came back to the organ- iser seeking a refund also for the flight.” Siebert noted a cruise organiser
would argue: “We were able to carry you, you were a no-show, we won’t refund you.” But he said: “A federal court case after the Icelandic ash cloud [in 2010] said if a cruise starts in Barcelona and passengers are unable to fly due to closed airspace they are allowed to claim a refund for the flight and the organiser needs to reimburse the cost.”
travelweekly.co.uk
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