BUSINESS NEWS the Package Travel Regulations dominated forum in London last week. Ian Taylor reports
Bonds and FFI availability ‘better but still limited’
Bonds and financial failure insurance (FFI) have become more readily available for businesses looking to meet financial protection rules, but choices remain constrained and costs higher than pre-pandemic. That is according to industry
lawyer Farina Azam, partner at Fox Williams, who said: “The bond market is significantly stronger than during and immediately after the
Farina Azam
that “insurers can’t refuse any claims in the event of a failure” and noted: “The bond organiser must be a member of an approved body, which means Abta or Abtot [the Association of Bonded Travel Organisers Trust].” A bond is then based on the
pandemic. Abta recently approved two new bond providers. Hopefully, we’ll start to see more.” She pointed out the number of
bond insurers working with the sector is limited by the condition
maximum amount of payments an organiser expects to hold or 25% of all payments in a 12-month period or 10% of all payments if the approved body has a back-up fund or insurance. Azam said: “The issue during the pandemic was there weren’t many insurers approved. There was a scramble by FFI insurers to get out of the market.”
UK ‘tinkering at edges’ compared with EU plans
The EU is considering a “root and branch” reform of package travel rules while the UK is merely “tinkering around the edges”, according to an industry lawyer. Rhys Griffths, partner at Fox
Williams, contrasted the EU’s “ambition” in its current review of the Package Travel Directive (PTD) with the Department for Business and Trade’s review of the UK Package Travel Regulations (PTRs). He told the Abta seminar: “PTD
reform is going to be much more root and branch, looking at ways to improve the directive and review how the PTD fits with EU Regulation 261 [on air passenger rights]. The ambition is impressive. In the UK, we’re tinkering around the edges.” Griffiths noted the EU is looking
at refunds for cancelled flights, the issue of vouchers and the status of Foreign Office advice, all of which caused problems during the pandemic. However, the EC is also
travelweekly.co.uk
considering limits on consumer prepayments, which Griffiths warned “could be problematic”. He said: “When flights were
grounded and package organisers had to refund all customers, it created huge liquidity problems, so the EU is looking at potential solutions should it happen again. One way would be a right for the consumer to seek a refund from the airline if it doesn’t refund the organiser. An alternative would be to require airlines to refund organisers within seven days.” Griffiths added: “We saw
organisers issue vouchers that weren’t necessarily financially protected in the early days of the pandemic. The EU is looking to regulate vouchers if it were to happen again.” It is likewise considering the status
of Foreign Office advice, with Griffiths noting: “The EC is looking at whether to link refund rights to advice.” The EC is considering a limit on consumer prepayments similar to rules
Rhys Griffiths
in Germany which cap deposits at a maximum 20% and require balances be taken only 30 days before departure. However, Hotelplan head of
legal affairs Toni Boswell warned: “A limit on prepayments would be a big thing for us. A lot of suppliers expect full payment up front. Only being able to take 20% as a deposit and full payment 30 days out would mean a huge liquidity challenge.” The EC is looking to publish
proposed amendments later this year. 18 MAY 2023
Kolatsis fears ‘Covid is driving force for reform’
A leading industry lawyer has urged the government “not to throw the baby out with the bathwater” in its review of the Package Travel Regulations (PTRs). Themis Advisory director Jo
Kolatsis said: “Covid tainted our view of the PTRs and how we react to disruption. We’re still living with the consequences. But Covid was extreme. As an industry, we never had issues with refunds in the past. My concern is Covid seems to be a driving force behind this reform. I hope the baby isn’t thrown out with the bathwater because of a situation we hope never to see again.” The Department for Business and
Trade has promised a consultation on reform of the PTRs “shortly”. Kolatsis called for clarification
on Foreign Office advice “which caused a lot of uncertainty” during the pandemic, saying: “Do we rely on Foreign Office advice as a trigger for refunds or not?” She also noted the difficulties
travel firms had obtaining airline refunds, saying: “Airlines are under no obligation to comply with the PTRs. We need to bring these things together. We’re part of one industry.” However, Kolatsis queried
whether the government should remove domestic tourism from the PTRs, arguing: “It would create an unlevel playing field.”
Jo Kolatsis 47
PICTURE: Karla Gowlett
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