Summer 2021: Navigating the travel traffic light system

Summer 2021: Navigating the travel traffic light system

Key Contact: Cristina Benezet

Author: Tom Geen

The recent demotion of Portugal from the green list characterises the current uncertainty faced by holidaymakers and the travel industry alike.  The lack of clarity and assurance from the government has meant that organising holidays to foreign countries is currently fraught with difficulty, and many operators have decided to avoid offering holidays to customers altogether this summer.

As a travel operator, how can you safeguard your company whilst continuing to offer customers the chance to get away this summer? This article briefly examines your options.

Cancellations and refunds 

When a holiday is cancelled, the Association of British Travel Agents (ABTA) advises that in order to determine whether any repayment to the customer is indeed due, you will need to establish: who cancelled the booking; the reasons for cancelling; and when the cancellation took place.

The starting point, when considering whether refunds or compensation are due, is to look at the terms and conditions of the booking. If you are arranging package holidays, your terms of booking with the customers should not conflict with the implied terms contained in the Package Travel and Linked Travel Arrangement Regulations 2018 (PTR). Under the PTR, if a customer cancels its travel package as a result of “unavoidable and extraordinary circumstances” (UEC), such customer will be entitled to a full refund and will not have to pay a termination fee. A customer will not be able to claim its refund for any other reasons (other than UEC) unless your terms and conditions expressly say so. On cancellation, you may offer the customer a refund credit note, a deferred package or a different package. If none of these are accepted by the customer then a full refund is due.

The traffic light system introduced by the government has caused confusion amongst many in the travel industry. Under this system, only red listed holiday destinations will entitle the customer to an immediate refund (under UEC) as travel to these destinations is essentially banned. Travel to amber list destinations such as Portugal is permitted although it is discouraged (subject to the quarantine rules) and will therefore not qualify a customer for a refund or cancellation under the PTR.

Covid-19 guidance given by the government, supported by ABTA, for assessing cancellation or amendment rights is broadly set-out below:

  • If the Foreign Office is advising against travel – You may offer the customer an alternative destination. If this is not accepted, the customer is usually entitled to a full refund.
  • The travel destination requires quarantine – This is seen a significant change to the holiday, triggering a right to a full refund.
  • UK Government guidance (amber/green) –The cancellation rights under the PTR do not apply to destinations where it is legal to travel for leisure purposes, even if it is against general government guidance, so no refund is due if you are able to provide the services contracted. The customer can only cancel your services in accordance with the cancellation terms agreed with you. Also, customers should be encouraged to check whether their travel insurance provides cover.
  • UK quarantine on return – This does not trigger a right to a refund or cancellation if the trip can still go ahead as planned and the services can be provided. If a customer chooses to cancel (and not accept any alternatives offered), full cancellation terms will apply.
  • COVID-related issues – if a customer tests positive for, or contracts COVID-19 this will not trigger a right to a refund under the PTR and the customer should be advised to speak to their travel insurer to cover this eventuality.

Compensation

The PTR protects travellers’ rights when booking package travel or linked travel arrangements. You are responsible under PTR for making sure that customers get the holiday they paid for, either by offering cancellation, repatriation or refunds, and in some instances, customers may be entitled to compensation if they suffered loss as a result of you breaching the PTR. In order to avoid this, you should ensure you follow ABTA advice.

T&Cs and Frustration

Refunds relating to non-package bookings will be governed by your terms and conditions, as the PTR will not apply. It is important to review your terms for current and future bookings to ensure they capture cancellation and refund policies in light of the pandemic.

If the situation is not covered sufficiently by your terms, you may be able to rely on the law of frustration. A contract may be set aside where unforeseen events either render contractual obligations impossible, or radically change the party’s principal purpose for entering into a contract. The UK Competitions and Markets Authority stipulates that this can occur where due to such events the services under the booking become impossible or illegal for you to perform (or the customer to receive) or where the services to be provided significantly change since the booking was made.

Changes to holiday bookings as a result of government restrictions triggered by Covid-19 may well cause a holiday booking to be frustrated. In this scenario, you will be entitled to deduct any expenses reasonably incurred to arrange the booking, before returning the remainder to the customer.

Customer information obligations

Part 2 of the PTR details the information to be provided to customers prior to booking, key rights and the minimum requirements for the package travel contract itself. Travel now is subject to several conditions, at least for the foreseeable future, and customers must be made aware of them. Maintaining a designated webpage with Covid-19 travel-related updates and FAQs could greatly assist customers. 

Foreseeable travel conditions should be set-out on your website if possible, for example:

  • Travel restrictions/prohibitions;
  • Declaration to travel;
  • Pre-departure testing;
  • Destination testing;
  • Quarantine;
  • Destination restrictions;
  • Return requirements; or
  • Travel insurance.

Conclusion

The current climate makes operating international travel packages very difficult.  If you plan to continue to offer holiday packages, it is imperative that you review your terms to ensure they capture the issues noted in this article. 

It is also important that you continue to monitor the governmental and legal developments in each country of destination to ensure that your policies and the information provided to your customers are clear and up to date.

For more information, please contact our Commercial and Technology Team.

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