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Holiday Financial Protection
The collapse of XL and other travel groupings in 2008, has highlighted the real problems of holiday financial protection, particularly, when it may be applicable and payable. The current debate about what constitutes a package, has seen companies re-create their business model where they claim to be agents, but still organise and sell package holidays. This claim then adds that whilst they are only acting as an agent, it is their belief that they sit outside the regulatory framework for consumer financial protection, for example ATOL. The model that they create simply reflects that which has been created by the low-cost airlines. In addition, there is a continuing argument between the travel industry, banks and the CAA as to who should be responsible for paying the holidaymaker when a holiday company fails! In this debate, the parties claim that the answer is to increase the levy (currently £1) payable by the holidaymaker! We take the view that it is the industry that should police its members and not the holidaymaker who should have to pay for this ‘additional’ insurance. If we only take the increased Consumer levy route, there would be no further ‘regulatory’ sanction that could then be taken against a company or an industry that quite possibly requires a closer supervision. Is this unreasonable? We think not. This is an industry that handles many millions of pounds of Consumer cash deposits – if they were part of the banking sector (ignoring their recent difficulties), they would be subject to tight regulatory controls. In summary, we consider the levy should stay at its present levels for Consumers – the industry should account for some additional financial responsibility, airlines and so called online travel providers should all be brought into the the same regulatory requirements as the ‘traditional’ package holiday industry (this would account for an influx in additional cash into the ‘protection’ fund) and finally as a considerable amount of ‘client money’ is handled by the industry, a regulatory supervisory framework should be imposed, to ensure that those who wish to operate within the travel arena, are suitable players, with rigorous checks as to their financial viability!
The following articles will provide further information and consideration of the financial protection issue. Please read our legal Notice at the bottom of this page.
Friday, February 26th, 2010
The EU Commission, through DG Mobility & Transport have ordered a Consultation into Air Passenger Rights. Such rights involve areas such as EU Directives 889/2002 (Air Carriers Liability – particularly on the issue of mishandled luggage), 96/67 (Baggage-handling/Ground-handling), 261/2004 (Denied Boarding, Flight Delays & Flight Cancellation), 1107/2006 (Reduced Mobility Passenger Rights), 1008/2008 (Common Rules for Air Operations) and 2111/2005 (Air Safety Issues). We have reported on the issues of flight rights, aircraft safety issues, lost or damaged luggage and financial protection for holidaymakers and air passengers. Read More
Tuesday, January 12th, 2010
Since the latter part of 2009 we have all watched with interest and sorrow whilst the toll of economic collapse takes place around us. The events surrounding the fall of the latest travel company, Globespan, provides an interesting window into the workings of travel companies, so-called ‘regulation’ and the plight of the holiday consumer and their complaints. Read More
Friday, December 18th, 2009
The news of the FlyGlobeSpan collapse provides a timely and important reminder of the recently announced Department for Transport Consultation, to update the Regulatory Framework for Aviation. Within the many aspects of this Consultation is the proposal to completely review the ATOL (Air Tour Operators Licence) scheme. This follows on from a number of high profile airline/travel company collapses which have left many holidaymakers either physically or financially stranded. We have dealt with a number of Consumers who have been ‘bounced’ between the CAA, ABTA and the Credit Card Companies – some of whom are still waiting for their money following the XL collpase! Read More
Sunday, November 29th, 2009
This is a critical moment for the future of EU holidaymakers and in particular, British holidaymakers! In 1990, the EU created the Package Travel Directive which was then adopted into various National Laws; the UK adopted this Directive as The Package Travel Regulations in 1992. Many millions of EU holidaymakers have enjoyed the benefit of Protection under this Directive – those Protections are now seriously threatened. Since 2003, there has been an attempt by the Travel Industry to reinterpret these Regulations, by reinventing themselves as ‘travel agents’, through internet sales. Whilst we are to be rightly concerned with the Financial Protection of holidaymakers, we must also be aware of the many other detriments or problems suffered by holidaymakers, which, according to online terms and conditions, are not the responsibility of these new ‘travel agents’! It is now imperative that the Consumer position is presented to the EU Commission following the announcement of their latest Consultation on Holiday Rights. It is simple; if the Commission is persuaded to keep the ‘internet’ players outside the remit of any new Directive, Consumers will be returned to the so-called pre-1992 ‘Golden Age’ of Travel when there was little or no Consumer Protection. The answers to this survey will be used to back up previous HolidayTravelWatch surveys and its findings will be presented to the EU Commission in February 2010. Your contribution is both valuable and timely – we would like to thank you for your kind assistance on this survey! Read More
Wednesday, November 25th, 2009
The recent case of CAA v Travel Republic has once again opened the debate as to what constitutes a ‘Package’. The debate has naturally centred on the issue of Consumer Financial Protection and the reader could be forgiven for thinking that this issue is all that rests at the heart of what is meant by Consumer Protection. Read More
Friday, July 3rd, 2009
In a recent edition of the Travel Trade Gazette a letter was written by a travel agent under the title – ‘Protection crisis is harming the good guy’s reputations’. It is important to consider the key points that this agent raised. They argue that if you sell insurance or other financial products you have to be accredited or certified. They also highlight regulatory requirements if you sell food or are involved in certain building work. The writer of the letter then states – “So surely the ruling should be if you want to sell holidays and travel to the consumer, you must be bonded. No bond, no business. Too many companies come and go, owing thousands of pounds to consumers. They offer ‘cheap’ holidays, often making pennies and wonder where it all went wrong. This then tars us with the same brush. The good guys are bonded, offer protection, have better knowledge and care about the consumer. They are not there to make a quick buck”. Read More
Friday, May 15th, 2009
The issue of Holiday Financial Protection through the ATOL scheme has attracted intense scrutiny since the collapse of the XL Group and Freedom Direct. We have been guiding Mr & Mrs A – consider this quote from Mrs A – “the more this is highlighted the better – various people who I have spoken to – are under the impression that if a Tour Operator has an ABTA/ATOL No, they are covered – how wrong they are!!” Mr & Mrs A booked a holiday through the collapsed travel provider, Freedom Direct. They purchased a flight, hotel and transfers, all stated as one inclusive price. They have advised that it was their intention to purchase a package holiday and that there was nothing that they could see or hear, which put them on notice that it was anything other than a package holiday! Read More
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