A court battle, which reached its climax at the City of Westminster Magistrates’ Court this week, has shone the spotlight on consumer protection for holidaymakers. The test case has prompted calls for a complete overhaul of the system, which leaves tens of thousands of travellers without protection every year.
At its heart is a dispute about whether Travel Republic, one of the fastest-growing online travel agents, needs an Air Travel Organisers’ Licensing (ATOL) bond. The ATOL scheme is designed to protect holidaymakers when a tour operator or airline collapses, ensuring that stranded customers are repatriated and those yet to travel get a refund.
The Civil Aviation Authority (CAA), which controls the ATOL scheme, has been clamping down on operators without such protections since the collapse last autumn of XL Leisure. Thousands of XL’s customers are still struggling to get a refund.
The CAA, which brought the action against Travel Republic, claimed, during a three-week trial at Stratford Magistrates’ Court, that the agent’s refusal to obtain an ATOL bond has damaged consumer protection. A spokesman says: “We undertook this with the aim of ensuring that holidaymakers receive the protection to which they are entitled.”
Travel Republic countered that it is not required to obtain a licence and operates its own insurance scheme.
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For many consumers it will come as a shock that they may not be covered by the official ATOL scheme when booking a trip. In some cases, such as Travel Republic, holiday companies may offer their own form of insurance. However, travel experts warn that many agents and holiday companies offer no protection.
It is estimated that non-protected travel accounts for more than half of all trips from the UK.
When the budget airline Sky Europe, which operated from Luton and Manchester, collapsed in September most ticket-holders lost their money. About 60 other airlines have collapsed in the past 12 months.
Judge Nicholas Evans ruled on Tuesday that Travel Republic was not guilty of breaking ATOL regulations, seemingly backing the status quo. However, travel experts say it is time for a complete shake-up of the system. Bob Atkinson, of Travelsupermarket.com, says: “If you went out on the street and asked how the current system works, I would imagine that only 10 per cent of people would get it right. The Government and the industry need to review completely the current measures to create a level playing field for all travellers.”
The Department for Transport has promised a consultation paper on consumer protection for holidaymakers by the end of the year. Pressure for reform is also coming from Europe, with the European Commission promising a review of the Package Holiday Directive this autumn. This ensures that holiday-package customers enjoy full protection; those who make their own arrangements do not.
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But while we are stuck with the current rules, it makes sense to find out where you stand before you travel.
Package deals
If you book a package holiday that includes flights, you are protected under the ATOL scheme. This ensures that, if you are abroad on a package holiday and your airline or tour operator fails, you will be flown home at no extra cost. If this happens before you travel, you must be offered a replacement holiday or a refund.
Your invoice from the tour operator will show whether you are ATOLprotected. You can also check at www.caa.co.uk to see if the company you are dealing with has an ATOL licence.
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Holidaymakers who book their flight and accommodation with different companies are unlikely to receive the same protection as that offered by a package holiday.
If you book a flight directly with the airline, you will definitely not be covered by ATOL if the airline goes bust when you are abroad. You will need to find a return flight with another airline and, if there is a delay, may need to book extra nights of accommodation. All of this will have to come out of your own pocket.
Travellers who haven’t set off will be able to get a refund only if they booked their flight with a company other than the airline itself. This company must be covered by the ATOL scheme or offer some other form of consumer protection. You may also be able to get some of your money back if you bought your holiday using a credit card or certain debit cards.
Credit cards
If you pay for your holiday by credit card, you should be entitled to a refund under section 75 of the Consumer Credit Act 1974, as long as the value of the holiday is more than £100 but less than £30,000. Debit cards, store cards and charge cards are not covered. However, anyone who uses a Visa debit card is protected by its Chargeback scheme.
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Travel insurance
Most travel policies do not cover the collapse of a travel agent, tour operator or airline. It is possible to take out extra cover, which is known as Scheduled Airline Failure Insurance (SAFI).
Play your cards right for a safe trip
If you plan to use a credit card to book your flight, take care, because many airlines will charge extra. British Airways, for example, charges credit card users £4.50 per person — so a family of four will pay £18.
Budget airlines are increasingly charging for debit card transactions, too. With Ryanair each passenger pays £5 per person each way if he or she pays by credit or debit card. At £10 return per person, that’s a £40 surcharge on a family trip for four.
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You can avoid these charges by getting a Visa Electron card, which doesn’t incur any fee. However, getting your hands on one is not easy.
Electron cards are usually available only to bank customers with a youth or basic bank account. Only a small handful of UK banks offer them, principally Halifax and Abbey.
However, the Travelex Cash Passport card is also an Electron card that can be loaded with foreign currency to spend on holiday. They are available in branches of Thomas Cook and Tesco.