Introduction to the PTRs
The roots of the current UK Package Travel Regulations trace back to the 1960s when UK tourists started to venture to Spain and the Mediterranean and the packaged travel industry picked up. During the 1970s there were various high profile failures, such as Court Line, with thousands of passengers left stranded abroad at airports and significant sums of money owed to people yet to travel. Public pressure following the case and other failures forced the UK Government to put in place a set of regulations to protect consumers. The Government subsequently set up the ATOL scheme in 1973, run and administered by the CAA and in 1992 formal UK legislation was put in place to protect consumers purchasing travel packages.
What is the PTD?
The Package Travel Directive (PTD) came into effect in 1990. Its provisions were introduced into UK travel law through the Package Travel Regulations (PTRs) in 1992.
What are the PTRs?
The Package Travel Regulations (PTRs) are a series of regulations for consumer protection rights that came into effect to make travel organisers legally responsible for protecting package holiday customers. Protection under the PTRs covers three main areas: the provision of information, financial protection and repatriation in the event of company failure and contractual liability in respect of package holidays.
What qualifies as a package?
The 1992 regulations define a package holiday as the pre-arranged combination of at least 2 of the following components: transport, accommodation, or other significant tourist services when sold or offered for sale at an ‘inclusive price’ and when the service covers a period of more than twenty-four hours or includes overnight accommodation. Currently, the Regulations only apply to holiday packages sold or offered for sale in the UK.
ABTOT is an approved body of the Department for Business, Energy and Industrial Strategy (BEIS) and therefore we are authorised to hold travel bonds on behalf of organisers in order to provide financial protection for customer prepayments, as dictated by these regulations.
ABTOT also now has an ATOL franchise with the CAA, which opens the door to cover for both licensable (flight-inclusive) and non-licensable (non-flight) turnover. ABTOT’s total protection reduces duplication and saves you time. From enquiry to approval, we provide a service that’s comprehensive, straightforward and cost-effective. Our knowledgeable, helpful staff will assist you, making the process simple and straightforward, with one application, under one association, giving you total protection.
Civil Aviation Authority (CAA) (ATOL)
By law, every UK travel company which sells travel including flights and flights only, is required to hold an ATOL, which stands for Air Travel Organiser’s Licence. If a travel organiser with an ATOL ceases trading, the ATOL scheme protects customers who had booked holidays with the firm. It ensures they do not get stranded abroad or lose money. The scheme is designed to reassure consumers that their money is safe, and will provide assistance in the event of a travel company failure.
ATOL was first introduced in 1973, as the popularity of overseas holidays grew. After a number of travel company failures left people stranded, the UK Government realised consumers required holiday protection should firms in the unregulated travel sector fall into difficulties.
The scheme was designed to cover charter flights and package holidays, and functioned well for years. However, the holiday market has changed considerably and a rise in online booking and low cost airlines means many people now book the components of their holidays separately.
As a result, changes were made to the ATOL scheme in April 2012. It now covers all overseas air holidays where a flight and accommodation have been booked together. It also covers some flights booked separately, and applies in some other circumstances too.
ABTOT also now has an ATOL franchise with the CAA, which opens the door to cover for both licensable (flight-inclusive) and non-licensable (non-flight) turnover. Benefits include:
Financial Conduct Authority (FCA)
Travel & General Insurance Services Limited is the sole provider of insurance backed travel bonds for ABTOT. Travel & General is an independent intermediary, entirely focused on the travel industry. The company underwrites financial protection products through binding agreements with Hiscox Insurance Company Limited. Travel & General also brokers travel insurance, combined liability insurance and other travel related insurances that clients require. Travel & General also has a number of Appointed Representatives who sell travel insurance to their customers. Travel & General is authorised and regulated by the Financial Conduct Authority (FCA) as an intermediary
The FCA regulates the financial services industry in the UK. They have rule-making, investigative and enforcement powers. The FCA came into force on 1 April 2013 through the Financial Services Act 2012. Prior to this the financial industry was regulated by the Financial Services Authority (FSA).
The Prudential Regulation Authority (PRA) also came into force on 1 April 2013 and is part of the new system. The PRA works alongside the FCA and is responsible for the prudential supervision and regulation of banks, building societies, credit unions, insurers and investment firms.
The FCA’s key aim is to ensure financial markets work well so consumers get a fair deal. To do this, the FCA follows 3 statutory objectives:
Their statutory objectives were set up under the Financial Services and Markets Act 2000 as amended by the Financial Services Act 2012.
As an intermediary, Travel & General are accountable to the FCA for its actions.
New Package Travel Regulations
The new directive will significantly extend the protection offered to customers, including broadening the definition of what a ‘package’ includes. Proposed in 2013, the new directive came into effect in January 2018. It has been driven by the way in which holiday booking has evolved over the years, for example the growth of low cost airlines and greater propensity for consumers to purchase travel and holidays online.
How will the proposed changes affect travel organisers?
Some travel organisers will be required to change their business models to comply with the broader definition of a ‘package’ as well as certain ‘non-packaged’ travel sales. Those offering Linked Travel Arrangements (LTAs) will need to know if they qualify and travel agents selling flights to consumers will now also need to provide financial protection. UK-based travel organisers selling packages to UK & EU customers may only need to comply with one set of regulations.
What’s important to SME travel organisers/what do they want?
SME travel organisers are looking for simplicity with a more straightforward and cost-effective solution to complying with the PTRs. Travel organisers want one body for licensable and non-licensable travel that can cover their total turnover.
Unfortunately, it’s expected that the new regulations will only make the process more complex. We’re working hard to make sure the industry is aware of the needs of SME travel organisers and that their voices are heard, as well as helping members to understand how the changes will affect them.
What do the changes to the PTRs mean for the travel industry overall?
For some, the changes may have very little affect whereas others, such as online travel organisers, it could be more significant. The Government isn’t proposing to do as much as it could to simplify the process; it appears to be doing just enough to implement the PTD requirements. For example the flight and non-flight inclusive package protection regime is not expected to be simplified, which is what the industry is crying out for.
From a consumer perspective the new changes seem to be a positive step forward, with more protection being put in place as the definition of what makes up a ‘package’ is extended. This has been a constant sticking point between the CAA and industry bodies and should mean greater consumer trust.
Travel Trust Association (TTA)
The Travel Trust Association (TTA) is a travel trade association. Unlike ABTOT their membership is less focused on specialist tour operators, consisting of travel agents, tour operators and travel organisers. Another main difference between the TTA and ABTOT is that the TTA hold customers’ prepaid money in a trust account.
The Confederation of Passenger Transport (CPT)
The Confederation of Passenger Transport UK (CPT) is the main industry body representing the bus and coach industry, and the focus for consultation on national and international legislation, local regulations, operational practices and engineering standards. Bonded Coach Holidays is a scheme set up to provide consumer protection for package holidays operated by operator members of the CPT.
Association of British Travel Agents (ABTA)
ABTA is the UK’s largest travel trade association, representing most forms of travel organiser. Having been around for 65 years they provide political lobbying and promote responsible tourism at home and abroad amongst other things. A key part of membership is a requirement for an ABTA bond to be put in place so that in the event of a travel business failing they have a process for getting travellers home or getting people their money back.
ABTOT’s preferred method of bonding is a travel bond with Travel & General. However, we will accept bank bonds too where this is felt more convenient by clients. The main difference between the 2 is that banks generally require security before they will issue a travel bond e.g. cash to be put aside or the financial guarantee secured against property such as the travel organiser’s home. In the past banks were able to offer lower rates than insurance backed bond providers due to the security requirement. However, in recent years insurance backed travel bond pricing has come much more in line with bank rates. Additionally, as insurance bonds still generally have no security requirements, they can provide a much more attractive deal for travel organisers.
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