Coronavirus mini-series: (5) holiday refunds and consumer rights

This blog by Cressida Mawdesley-Thomas of 12 King’s Bench Walk highlights that travellers’ rights to refunds under the Package Travel and Linked Travel Arrangements Regulations 2018 (“PTR 2018”) have not changed.

There has been no official guidance from the European Commission on the Package Travel Directive 2015 in the context of COVID-19. However, the guidance issued by ABTA (formerly the Association of British Travel Agents), a trade body which offers “advice and guidance to you, the travelling public, as well as leading the travel industry”, is arguably inconsistent with the position in law, which remains that travellers still have a right to a refund within 14 days if the travel provider cancels the trip on account of COVID-19. In England and Wales these rights can only be abrogated by retrospective legislation.

Retrospective legislation is rare and involves Government and Parliament carefully weighing up competing public interests. While travellers’ rights have been subject to amendment in some European countries, they have not yet been in England and Wales. In a sea of misinformation, travellers need to know their right to a refund is unchanged.

The European Commission’s Directorate-General’s Guidance

At the outset it is important to note that no official guidance has been provided by the European Commission on the Package Travel Directive 2015 (“the Directive”) in the context of COVID-19. However an information note, available here, was released just over a month ago by the European Commission’s Directorate-General for Justice and Consumers on the Directive and COVID-19. No guidance has since been issued.

The information note makes clear:

“This document is not legally binding and provides only guidance. It has not been formally adopted or endorsed by the European Commission and cannot be regarded as an official position of the European Commission. It only reflects the views of the Commission’s Directorate-General for Justice and Consumers. The authoritative interpretation of Union law remains within the sole remit of the Court of Justice of the European Union.”

Struggling Tour Operators

The information notes states: “Having regard to the strains on liquidity of tour operators because of missing new bookings coupled with reimbursement claims, travellers should consider accepting that their package tour is postponed to a later point in time. Having regard to the current uncertainty to make travel plans, that could be done by means of a credit note (so-called “voucher”). However, the traveller should have the possibility to ask for a full refund if, eventually, he or she does not make use of the voucher. Moreover, it should be ensured that the voucher is covered by appropriate insolvency protection.”

Travellers’ Rights

The guidance also highlights the rights of consumers (emphasis original):

  • “The traveller has the right to get a full refund of any payments made for the package, within 14 days after termination of the contract.” This reflects travellers’ rights under reg. 14(3)(b) of the PTR 2018.
  • If you have booked a package tour and you are blocked abroad, your tour operator must provide assistance. This reflects reg. 18 of the PTR 2018.

Interpretative guidance has also been issued by the European Commission (without prejudice to the interpretation of the Court of Justice), on how certain provisions of the EU passenger rights legislation apply in the context of COVID-19, notably with respect to cancellations and delays: available here. However, the guidance does not cover the 2015 Package Travel Directive. Importantly, the interpretive guidance notes that:

“This situation [where passengers cannot travel or want to cancel a trip] has to be distinguished from the situation where the carrier cancels the journey and offers only a voucher instead of the choice between reimbursement and re-routing. If the carrier proposes a voucher, this offer cannot affect the passenger’s right to opt for reimbursement instead.” This makes it clear that travellers, in the context of transport across travel modes, still have right to be reimbursed.

ABTA’s Response

It is important to highlight that whilst ABTA advises both the travelling public and the travel industry, they are lobbying the Government to remove travellers’ rights to a refund. There is a clear conflict between the travel industry and consumers.

ABTA has recently published guidance to its members on the use of Credit Refund notes, however, it is important to note that this is not legally binding guidance.

The ABTA website under their Coronavirus Guidance page at the beginning of April stated that “The European Commission has already relaxed its position on the regulations, and as a result many other EU countries including France, Italy, Belgium, Spain, Germany, The Netherlands and Denmark have taken action to amend their laws and/or provide additional guidance as a result of the crisis.” This is liable to mislead travellers. The law has not been “relaxed”, it has never changed.

However, ABTA is correct to note that in many other countries governments have taken action to temporarily amend their travel regulations and provide additional guidance to allow refunds to be paid over a longer period or to allow refunds to be paid by a holiday voucher, a helpful summary document is available here.

Summary of European Governments’ Responses

  • In countries such as Belgium, France, Italy, Spain and Germany, amongst others, tour operators can issue vouchers which are valid for a certain period of time.
  • Under the German system if the traveller has not redeemed the voucher by the end of 2021, the organiser must refund the value and hardship clauses are also planned for all customers who cannot reasonably be expected to accept a voucher due to their financial situation.
  • In Denmark, the Government has announced a 1.5 billion DKK state guarantee to cover package travel cancelled before departure due to COVID‐19 up until the 13 April.
  • In Malta the Government has issued a legal notice extending the deadline to refund consumers from 14 days to 6 months.

ABTA’s guidance has since been updated and at the time of writing states: “The European Commission, which is responsible for the relevant regulations, has advised Member states to find “flexible solutions” to demands for refunds on cancelled holidays during the Covid-19 crisis.” Flexibility has been advocated generally but not specifically in relation to the 2015 Directive.

Flexibility – or Abrogating Travellers’ Rights?

Under the law of England and Wales the only way for travellers’ rights under the PTR could be extinguished is if Parliament were to legislate retrospectively. However, retrospective legislation is rare. According to the Oxford Dictionary of Law, retrospective (or retroactive) legislation is: “Legislation that operates on matters taking place before its enactment, e.g. by penalising conduct that was lawful when it occurred. There is a presumption that statutes are not intended to have retroactive effect unless they merely change legal procedure.” (Elizabeth A Martin (ed), Oxford Dictionary of Law (4th Ed., 1997), p. 406).

Under a previous Government when Harriet Harman was the Solicitor-General in 2013 she said: “The Government’s policy before introducing a legislative provision having retrospective effect is to balance the conflicting public interests and to consider whether the general public interest in the law not being changed retrospectively may be outweighed by any competing public interest…”

There are, of course, huge competing public interests here: those of the travel industry who employ thousands of individuals and those of travellers. Although, the Government’s ‘furlough’ grant scheme can still, in certain circumstances, be accessed by companies in administration (see the related article here) ABTA is calling on the Government to do more (including abrogating traveller’s rights under the PTR) to help the struggling travel industry facing a liquidity and solvency crisis.

Both individual households and businesses alike have been hit hard economically by the COVID-19 pandemic and this is a political issue for Government and Parliament to address. However, in the absence of any retrospective legislation, those who have not received a refund are entitled to bring a claim.

Who knows that the Government will do. For now, travellers’ rights remain unchanged and it seems unlikely, given the lack of historical precedent and constitutional difficulty, that Parliament would legislate retrospectively. But these are unprecedented times. We will keep you updated.

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