Menu Toggle

When does travel need financial protection?

We’ve got it covered

The Package Travel and Linked Travel Arrangements Regulations 2018 and the Civil Aviation (Air Travel Organiser’s Regulations) 2012 (as amended) require travel companies to provide security for the monies that consumers pay for certain types and combinations of travel arrangements booked with them and for consumers’ repatriation in the event of their insolvency. This means that in respect of all arrangements requiring protection, in the event of the travel company making the booking becoming insolvent, funds will be available to ensure that consumers are not left stranded abroad or will arrange to refund them money they have paid for an advance booking.

Broadly speaking, the effect of the above two pieces of legislation taken together mean that travel arrangements sold as a ‘Package’ or ‘Linked Travel Arrangement’ require tour operator bonding whether or not they include a flight. Packages including a flight will require the seller to hold an Air Travel Organiser’s Licence as well as to carry financial protection.

What is a ‘Package’

The definition of a ‘Package’ in the Package Travel and Linked Travel Arrangements Regulations 2018 changed from 1st July 2018, capturing a far wider selection of travel sales:-

“package” means a combination of at least two different types of travel services for the purpose of the same trip or holiday, if—
(a) those services are combined by one trader, including at the request of, or in accordance with, the selection of the traveller, before a single contract on all services is concluded; or
(b) those services are—
(i) purchased from a single point of sale and selected before the traveller agrees to pay,
(ii) offered, sold or charged at an inclusive or total price,
(iii) advertised or sold under the term “package” or under a similar term,
(iv) combined after the conclusion of a contract by which a trader entitles the traveller to choose among a selection of different types of travel services, or
(v) purchased from separate traders through linked online booking processes where—
(aa) the traveller’s name, payment details and e-mail address are transmitted from the trader with whom the first contract is concluded to another trader or
traders, and
(bb) a contract with the latter trader or traders is concluded at the latest 24 hours after the confirmation of the booking of the first travel service, irrespective of whether the traveller concludes separate contracts with one or more travel service providers in respect of the services.
(6) A combination of travel services where not more than one type of travel service of the kind listed in paragraph (a), (b) or (c) of the definition of “travel service” is combined with one or more tourist services of the kind listed in paragraph (d) of that definition is not a package if the latter services—
(a) do not account for a significant proportion of the value of the combination and are not advertised as, and do not otherwise represent, an essential feature of the combination; or
(b) are selected and purchased after the performance of a travel service of the kind listed in paragraph (a), (b) or (c) of the definition of “travel service” has started.
Package
roofs

What about ‘Linked Travel Arrangements’?

Linked Travel Arrangements (LTAs) are combinations of travel service where a trader has facilitated a combination of travel services but where the ties between the services concerned aren’t so close as to mean that a package has been created. There has to be a clear separation of the booking and selection processes of the services making up the LTA, i.e. one booking is fully concluded before the next service is selected.

There are two specific types of LTAs described in the Package Travel and Linked Travel Arrangements Regulations 2018 but overall the main characteristics of an LTA are that:
• At least two different travel services are purchased for the same trip or holiday;
• The purchase does not constitute a package so that it does not fall within any of the package categories (e.g. two travel services are not purchased in a single booking process or at a total price);
• The traveller has separate contracts with the service providers; and
• The trader facilitates the sale in one of the ways described for either specific type of LTA

Sellers of LTAs will need to provide some insolvency protection, but this type of bonding is limited when compared to what’s needed to sell package.

 

When do I need cover to sell a ‘Flight Only’?

If you sell a charter or a scheduled flight where a ticket isn’t issued straight away and you are not acting as an agent for an ATOL holder, you will need to hold an ATOL yourself and financially protect either with an ATOL Bond or trust account, the monies paid for that flight.

Agent or Principal?

Even if you can be sure of what type of sales you are making, the contractual capacity in which you are making those sales is crucial in assessing whether or not they need to be financially protected. Are you selling arrangements as an agent for another supplier or as the supplier of those arrangements yourself (i.e. you are acting as a principal in the contract)? You may think you are acting as an agent when you’re actually taking on a principal status, which may create obligations on you to financially protect your sales.