My first of two previous articles on consumer rights for cancelled trips was based on trips cancelled in the normal course of business, and my second explained how our two preferred travel companies had dealt with the fallout of the 2020 cancellations.
Since then I have looked at the regulations covering the package travel industry, and there are specific rights that would appear to apply for cancellations as a result of a pandemic such as Covid-19.
The travel industry is regulated by the 2018 regulations for the travel and linked travel arrangements.
In the guidance notes for these regulations there are specific provision applicable to the cancellation of a package due to ‘unavoidable and extraordinary events’
GUIDANCE NOTES FOR 2018 REGULATIONS FOR THE PACKAGE TRAVEL AND LINKED TRAVEL ARRANGEMENTS.
32. If an organiser has no choice but to significantly alter the main characteristics of the package, or cannot fulfil any special requirements of the traveller which the organiser has previously accepted (paragraph 1 of Schedule 5), or (being permitted to do so by the package travel contract) increases the price by more than 8%, then the organiser must inform the traveller without undue delay and provide the traveller with the option to terminate the contract without paying a termination fee. These proposed changes must be communicated to the traveller in a clear, comprehensible and prominent manner on a durable medium. A reasonable period within which the traveller has to respond should also be communicated.
33. If a traveller fails to respond to notification of the relevant changes in the first instance, the organiser should send a further notice. If the traveller fails to respond within a reasonable deadline set by that further notice the contract will terminate but the organiser must refund all payments without undue delay and in any event no later than 14 days after the contract is terminated. Termination by the traveller (regulations 12 and 14)
34. The traveller may terminate a package any time before the start of the package but, if he / she does so, he / she may be required to pay an appropriate and justifiable termination fee to the organiser, taking into account expected cost savings and income from alternative deployment of travel services. Cost savings are costs that the organiser saves due to termination, e.g. costs that he / she no longer has to pay to a third party. Alternative deployment means that the organiser has been able to use the freed capacity otherwise, e.g. by selling the package or parts thereof to another traveller. In some instances, the organiser may not be able to redeploy a travel service and it could be justifiable to not reimburse the corresponding value of that service, although this should be assessed on a case by case basis. For example, if the organiser cannot cancel an air ticket (common with economy class tickets) and, therefore cannot redeploy it, it would be justifiable to not reimburse the price of the ticket. Organisers may also specify standardised 15 termination fees in the contract based on reasonably anticipated savings and income and the amount of time between termination and the date the package was due to start. The organiser must provide a justification for the level of termination fee if the traveller so requests. If the traveller does terminate, the organiser must refund the traveller with the amount of the payments he / she has made minus the termination fee; that refund must be made without undue delay and in any event no later than 14 days after termination.
35. Travellers also have the right to terminate the package travel contract without paying a termination fee if unavoidable and extraordinary circumstances occur at the place of destination or its immediate vicinity which significantly affect the performance of the package or the carriage of passengers to the destination. If the traveller does terminate then the organiser must provide a full refund without undue delay and in any event no later than 14 days after termination.
36. Unavoidable and extraordinary circumstances are defined as a situation beyond the control of the party who seeks to rely on such a situation and the consequences of which could not have been avoided even if all reasonable measures had been taken. Examples given in recital (31) of the Directive include warfare, other serious security problems such as terrorism, significant risks to human health such as the outbreak of a serious disease at the travel destination, or natural disasters such as floods, earthquakes or weather conditions which make it impossible to travel safely to the destination as agreed in the package travel contract.
37. There will occasionally be borderline situations in relation to unavoidable and extraordinary circumstances that need to be considered on a case by case basis and may ultimately have to be decided by the courts. Termination by the organiser (regulation 13)
Under these regulations it would seem para 32 places an obligation on the organiser to offer a full refund, and paras 35 and 36 make it clear in the event of a cancellation of a package due to significant health risks at the travel destination travellers should in the first instance be offered a full refund.
This does not prevent the traveller coming to some other arrangements with the tour operator, but they have a right to be offered the full refund as an alternative to any other arrangements.
Performance of the Package
12. 2018 PTRs explicitly places liability for the performance of the travel services included in the package on the organiser (regulation 15) irrespective of whether the travel services are performed by third parties. The Organiser and the Retailer
13. The 2018 PTRs distinguish between organisers and retailers. To clarify the distinction, organiser and retailer are defined (in regulation 2) as:
- Organiser: this is the trader who combines and sells packages. In the case of Package Category 6, the organiser is the trader who passes on the traveller’s name, payment details and email address to another trader to create a package.
- Retailer: this is a trader other than the organiser who sells or offers for sale packages combined by an organiser, i.e. an organiser’s agent.
14. In some cases, the person with whom the traveller immediately deals in purchasing a package will be the organiser. In other cases, the traveller will be dealing with a retailer selling on behalf of an organiser.
15. When considering whether a trader is an organiser, it should make no difference whether that trader is acting on the supply side or presents himself as an agent acting for the traveller. Any trader who ultimately combines a package will be the organiser for the purposes of the 2018 PTRs. Lack of conformity
16. The organiser is required to remedy any lack of conformity with the contract (regulation 15), unless it is impossible to do so, or costs would be disproportionate taking into account the lack of conformity and the value of the travel services affected. If the organiser is unable to address a lack of conformity that substantially affects the performance of the package then the traveller may terminate without paying a termination fee and will be entitled to an appropriate price reduction, and compensation if appropriate.
17. If the organiser does not address the lack of conformity within a reasonable period set by the traveller, the traveller may do so him / herself if he / she 11 thinks it is necessary and request reimbursement of the necessary expenses unless the lack of conformity is impossible to address. Reasonable period is not defined, however we would expect the traveller to take account of the extent of the lack of conformity, the impact on their enjoyment and practicalities involved in addressing it when setting a reasonable period. In certain cases there should not be a need to specify a time-limit, in particular if immediate remedy is required. This would apply, for instance, when, due to the delay of a bus provided by the organiser, the traveller has to take a taxi to catch his flight on time.
18. Travellers need to inform the organiser without undue delay, taking into account the circumstances of the case, of any lack of conformity they perceive during the performance of a travel service included in the package travel contract. Failure to do so may be taken into account when determining the appropriate price reduction or compensation for damages where such notice would have avoided or reduced the damage.
19. In cases of non-conformity where the package includes carriage of passengers back to their place of departure, the organiser must arrange for repatriation using equivalent transport if the lack of conformity is not remedied except where the lack of conformity is for the reasons set out in para 20. Below.
20. Travellers will not be entitled to compensation for damages (regulation 16) if the organiser can prove that lack of conformity is: • attributable to the traveller; • attributable to unforeseeable or unavoidable actions of a third party not connected to any of the travel services included in the package; or • due to unavoidable and extraordinary circumstances.
21. Recital (24) of PTD 2015 makes clear that the intention of PTD 2015 is that compensation should also cover non-material damage, such as compensation for loss of enjoyment of the trip or holiday because of substantial problems in the performance of the relevant travel services.
Enforcement to these regulations are carried out by The Competition and Markets Authority (A government appointed body)
This body issued two sets of guidance to the travel industry during the year excerpts from which are shown below.
EXTRACT FROM THE COMPETITION AND MARKETS AUTHORITY LETTER TO THE TRAVEL INDUSTRY 10TH JULY 2020
6. In general, the harmful conduct includes:
• Consumers not being offered and/or provided full cash refunds in accordance with their statutory rights. This includes consumers not receiving refunds without undue delay and in any event not later than 14 days after the package travel contract has been terminated. It also includes consumers only being offered a voucher or the right to rebook a holiday instead of a refund.
• Consumers losing their deposits and/or being charged cancellation fees when exercising their statutory right to terminate a package holiday contract and when they are entitled to a full refund.
• Consumers not being provided with clear information and/or being otherwise misled about their statutory rights.
• Consumers facing significant barriers when trying to exercise their statutory rights. For example, consumers being asked to request a refund on their terminated package booking by telephone, but being unable to readily contact businesses in this way.
• Consumers being unable to contact businesses effectively to discuss other concerns, such as wanting to pay their balance in order not to forfeit their deposit as a result of late payment.
7. The CMA recognises that the pandemic has created extraordinary pressures on package holiday businesses. Although we were sympathetic to the challenges faced in the early days of the pandemic, it is nonetheless important that businesses comply with consumer law.
8. Where businesses have breached consumer law, the CMA expects them to take immediate action to bring themselves into compliance and address any consumer harm arising from the breaches. We recommend that you check your practices and policies are in line with the requirements of consumer law and make any changes where necessary. For example:
a. As referred to in paragraph 5 above, consumers have a statutory right to a full cash refund within 14 days from termination of their package holiday contract in certain circumstances. This includes where:
i. a package holiday contract is terminated by an organiser where it is prevented from performing the contract because of unavoidable and extraordinary circumstances, or
ii. where the consumer terminates the contract in the event of unavoidable and extraordinary circumstances occurring at the place of destination or its immediate vicinity and which significantly affect (a) the performance of the package, or (b) the carriage of passengers to the destination.
We expect businesses to comply with these requirements where package holiday contracts are terminated due to the COVID-19 pandemic. We are aware that many consumers have been promised full cash refunds, but these have yet to be paid, contrary to the requirements of the PTRs. We expect businesses to provide such refunds promptly and without undue delay (bearing in mind payment should have been made within 14 days of termination).
b. When consumers are contacted, either about existing or new bookings, they should be given clear and legally correct information about their options following termination. These should always include the option of receiving a full cash refund without undue delay and in any event not later than 14 days.
c. Where consumers have not been provided with full or accurate information 4 about their statutory rights, we consider it is important that this is corrected so consumers are able to make the decision that is right for them. Accordingly, we would expect businesses to take proactive and prompt steps to contact their customers who may have been provided with incorrect information and/or denied a cash refund to which they were entitled by law and:
i. explain that they have (or as the case may be, had) a statutory right to a refund;
ii. explain the options available to the consumer, including how to obtain a refund;
iii. where the 14-day statutory deadline has already been missed as at the date of this letter, ensure that any refunds due are paid promptly and without undue delay (bearing in mind payment should have been made within 14 days of termination); and
iv. for all other cancelled bookings, make payment of refunds within the 14-day statutory period.
d. Package travel organisers and/or retailers must not direct a consumer elsewhere if that consumer requests a cash refund from the company in accordance with UK consumer protection law, for example by asking them to claim from insurers or payment card businesses.
e. Furthermore, businesses should be proactively communicating with consumers and letting them know when they will be paid their refund, keeping in mind the requirements of the PTRs. Why this is important
EXTRACT FROM CMA LETTER 28TH AUGUST 2020
Contracts that cannot go ahead due to lockdown laws
In some circumstances, due to lockdown laws, a contract cannot go ahead as agreed or at all, and is therefore ‘frustrated’. A contract will be frustrated as a matter of law if, due to no fault of the parties, something happens after the contract was entered into which means it can no longer be performed at all or performance would be radically different to what was agreed.
As a result, the contract comes to an end and, where consumers have paid money in advance for services or goods that they have yet to receive, they will generally be entitled to obtain a refund.
They will also not be required to make further payments.
In particular, for most consumer contracts, the CMA would expect a consumer to be offered a full refund where:
- a business has cancelled a contract without providing any of the promised goods or services
- no goods or services are provided by a business because this is prevented by the lockdown laws
- a consumer is prevented from receiving any goods or services, because, for example, lockdown laws in the UK or abroad have made it illegal to receive or use the goods or services
In most cases, consumers will contact a business to ask for their money back, but there is no requirement for consumers formally to communicate with a business before becoming entitled to a refund.
Examples of legal restrictions in lockdown laws include:
- restrictions imposed under the original lockdown laws in the early stages of the pandemic
- restrictions imposed by local lockdown laws
- specific restrictions imposed by local authorities under their legal lockdown powers
- mandatory self-isolation following a direction from a public health officer
- mandatory self-isolation when returning to the UK from certain countries which may affect the consumer’s ability to use a service during the self-isolation period (provided that the requirement to self-isolate was imposed after the consumer had entered into the relevant contract and was not reasonably anticipated by the consumer)
If laws in another country prevent a business from providing a service under a contract with a UK consumer or prevent that consumer from receiving the service, then in most cases consumers will also be entitled to a refund.
Businesses should not require consumers to take unreasonable or unnecessary steps in order to obtain refunds. A business imposing such barriers may breach consumer protection law by doing so.
Obviously these rules apply only in unavoidable and exceptional circumstances such as the Covid-19 outbreak.