New Directive could lead to exodus of operators, warns ATIPAC
Travel firms will be able to avoid providing any financial protection for holidays sold in the UK by relocating to countries outside the European Economic Area if proposed changes to the European Package Travel Directive (PTD) go ahead, the government has been warned.
In its response to the proposals, the Air Travel Insolvency Protection Advisory Committee said it was concerned that, as it is presently drafted, it would be "very difficult to avoid mass avoidance" of the Directive.
Committee chairman John Cox said it was possible more companies would follow the example of the Lowcostholidays, which has relocated its business to Majorca which, although the Balearics is part of the EU, means that it is no longer obliged to hold an ATOL.
"As the Directive is drafted at the moment it gives companies a loophole to avoid the regulations by moving outside the EEA," said Cox. "I have no evidence many companies are planning to do this but it is possible.
"If they follow the example of Lowcost in moving to Spain, they will come under a different regime to the UK. If companies move outside the EEA altogether, then we have even more of a problem."
The Civil Aviation Authority has warned consumers that holidays sold by Lowcost are no longer protected by its ATOL-licensing system and Cox said that despite its investigation into the operator it was still unclear whether holidaymakers who book with the company are protected under either Spanish or Balearic law.
At the time of its move, Lowcost said it was "fully licensed under Spanish and Balearic law which implements the Package Travel Directive".
However, Cox said:"If Lowcost were to fail consumers may or may not get their money back, but if they were stranded overseas they would have to pay to get themselves home and submit a claim to the Spanish courts and even if this was accepted, even if they could negotiate a foreign legal system in a foreign language, they would then become a creditor and maybe get back 10p in the pound.
"That for the consumer is appalling. Outside the EEA, in countries where there is no protection regime whatsoever, I shudder to think what will happen."
Cox warned that companies need only move to the Isle of Man or the Channel Islands to avoid the Directive.
"The Committee’s view is that, as it is presently drafted, it will be very difficult to avoid mass avoidance of this Directive."
ATIPAC also said it was "extremely concerned" at the emergency of the Agent for Consumer business model and insisted that these sales must be within the scope of the Directive and that travel organisers putting together ad hoc trips, such as Hajj pilgrimages are not allowed to exploit a loop-hole to avoid providing financial protection.
The European Commission has asked for comments on the latest draft to be submitted by March but the new Directive is not likely to be adopted by member states for at least two years.
ATIPAC’s full response to the call for evidence is available at: www.atipac.org.uk
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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