The direction of travel in 2021

The COVID-19 pandemic and Brexit have brought many challenges and changes to the way travel organisers have planned and operated their businesses over the past 12 months. Whilst the Brexit deadline for a deal has been and gone, its effects are still very much with us as businesses now need to work through the ramifications of the Trade and Cooperation Agreement (TCA) on their UK and overseas operations. Combined with COVID-19 and the fact that we will seemingly be living with the virus in our midst for some time to come, travel organisers need to ensure that they are doing all that they can to remain competitive and compliant in this new travel era.

This article will explore some of the key areas that travel organisers should consider as part of their ongoing business review, as well as looking at how travel services can be sold for the future travel market.

The new travel era

One of the key requirements of the Package Travel and Linked Travel Arrangements Regulations 2018 (PTRs), which continues to be applicable post Brexit, is the requirement for insolvency protection for selling packages or Linked Travel Arrangements (LTAs). Whilst most travel organisers have this in place for sales to UK customers, in this new post-Brexit landscape, it may now also be needed in an EU member state in the event that the travel organiser sells directly to EU based customers. This requirement may be negated, however, where the travel organiser has an EU subsidiary that already has EU member state insolvency protection in place that the UK travel organiser may be able to rely on.

The other key significant change that the TCA has brought is in regard to the Posted Workers Directive 1996, which ceased to apply from 1 January of this year. When considering overseas staffing matters, travel organisers are now required to work within the framework of either the TCA Member State Reservations on tourism and travel related services or the short-term business visitors criteria. Each restrict the number of days a person is permitted to be in an EU member state to 90 days within any 180 days, or six months, respectively, in the absence of an EU member state work permit. However, the Common Travel Area (CTA) agreement continues to offer a flexible alternative for those travel organisers who operate – or are planning to operate - within the UK only.

In terms of communications with travellers, it is imperative that travel organisers continue to fulfil their duty under the PTRs to inform travellers of any passport and visa requirements, in addition to health formalities of the country of destination, before the conclusion of any package booking contract. With travel restrictions set to ease in the near future, the travel corridors system back in operation and the potential for COVID-19 testing pre and post departure, the passing-on of correct information and/or signposting could be to the travel organiser’s advantage in regard to defending certain legal claims. The same can be said of advising travellers of the six month passport validity requirement and the necessity for airport transit visas for certain (non-UK) third country nationals when transiting via certain EU member state airports. Further, travel organisers should signpost and/or inform travellers of the introduction of the UK Global Health Insurance Card (GHIC) that replaces the European Health Insurance Cards (EHICs), and the forthcoming ETIAS on-line visa scheme for travel to the EU, which is currently scheduled to be introduced towards the end of 2022.

Having correct and comprehensive booking conditions that include such pre-travel information, as well as clauses on COVID-19 testing and COVID-19 destination restrictions; unavoidable and extraordinary circumstances (force majeure); indemnities and the requirement to provide additional assistance in destination to package bookings; have become invaluable to travel organisers since the COVID-19 outbreak. It is also important to note that booking conditions should also include (where packages and/or LTAs are being sold) the relevant prescribed clauses from the PTRs, together with details of the insolvency protection held by the travel organiser. As a matter of course, most travel organisers would benefit from checking their booking conditions for completeness, ahead of the travel market opening up again.

In light of the above, it is all too easy to forget about the travel organiser’s supply chain – the hotels, villas, transport providers, excursion suppliers and destination management companies that the travel organiser contracts with. If these business to business supply agreements are not carefully drafted, do not have the correct chain of indemnities in place or fail to provide the correct insurances, permits or indemnities, then the travel organiser may struggle to claim from their suppliers in the event that the travel organiser is found liable for damages, as a result of a traveller’s claim against them.

Whilst the travel industry has been undeniably impacted by COVID-19 and Brexit, given recent news reports on summer 2021 booking volumes since the UK Government announced the planned easing of restrictions, it seems likely that travel will return to pre-COVID levels over time. Indeed, there is some speculation as to whether the finite supply of flights and accommodation this summer may, in fact, have the effect of increasing prices (and therefore margins) of the travel operators. This then leads to the question of whether the past year’s events will result in travel organisers continuing to sell their travel services in the same manner as they did before, or whether some may look to change their operating and sales models in order to reduce risk?

Will the future travel market see a move towards selling more LTAs and single travel services rather than packages in an attempt to offer a more flexible product range, with arguably lower operating risks? Or will the package continue to offer the reassurance and peace of mind to some traveller segments, with travel operators using this fact as a unique selling proposition?

The selling of LTAs and single travel services certainly avoids some of the more onerous obligations that the PTRs place on travel organisers, with LTAs only requiring the provision of insolvency protection under the PTRs, whereas the selling of single travel services are subject to the Consumer Rights Act 2015 (and the findings and pinions of the Competition and Markets Authority). However, given the increase of extreme weather occurrences and other now all too familiar ‘unavoidable and extraordinary events’, the duty of the travel organiser to be responsible for the provision and performance of the package booking may well retain and secure that segment of the travel market that continues to have a lower appetite towards risk.

Comment

Given that travel organisers now have some clarity as to how they can operate under the TCA and, since the UK Government has indicated a reluctance to return to a full lockdown going forwards, travel organisers would benefit from taking this time to review their operating models, consumer facing booking conditions and business to business supplier contracts in order to ensure that they are relevant to their business model and are sufficiently comprehensive and robust, ahead of the forthcoming re-opening of the travel sector.

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