Updated communiqué from ATTA® Legal Advisor (Tourism) Alan Bowen

Corona Virus. Obligations and Rights

Updated communiqué from ATTA® Legal Advisor (Tourism) Alan Bowen

This is as update on 28 February communiqué regarding obligations and the rights of customers in light of the spreading Corona Virus and an apparent reluctance to travel by customers. The information was correct at the time of going to press 1500 on 10th March but may change at any time.
 
The rules and rights depend on what has been sold.

Single item sales

  • If a customer has purchased just a flight or accommodation on its own, although they may be putting together a holiday by sourcing products from different suppliers, then in the absence of advice against all but essential travel, which currently applies (from the UK at least) to mainland China, Daegu and Cheongdo in South Korea and the whole of Italy only, customers are subject to the booking conditions of the supplier, which in most cases will incur normal cancellation charges
  • Certain airlines are allowing changes but these vary for both the destinations and periods of change

 
Package Holidays

When you sell a package holiday, transport and accommodation, or car hire or a cruise or other tourist services such as tickets for an event, it is your booking conditions that apply, not the actual suppliers. In most cases this means customers who wish to cancel, do so on your cancellation charges alone. Again if the destination is not one to which government advice applies, you do not have to offer a free cancellation or free transfer to another holiday and if you do so, it is simply on the basis of a commercial decision that on a long term basis you may better off not forcing customers to travel against their will or cause them to lose money.
 
Problems will arise where a supplier announces that they are cancelling part of the holiday, a cruise for example. If that was a significant element of the package and cannot now be provided, the Package Travel Regulations set out customer rights. If possible, offer a suitable alternative, or offer to delay the holiday to a later date, but in all instances, customers are entitled to a full refund if they no longer wish to travel. What is significant will depend on the facts, 3 days out of 7 is definitely significant, 3 out of 14, if they can be replaced, probably is not.
 
For the first time we are faced with a new right of customers to cancel under the 2018 Regulations in circumstances where you are not forced to make any changes at all. Regulation 12(7) states:
“In the event of unavoidable and extraordinary circumstances occurring at the place of destination or its immediate vicinity and which significantly affect—
(a)the performance of the package, or
(b)the carriage of passengers to the destination,
the traveller may terminate the package travel contract before the start of the package without paying any termination fee.”
At the time of BEIS consulting with the travel industry, we asked if it could be made clear that this relates to situations where the FCO advises against travel but the government department made it clear that they thought the rights were much wider than this. At the time they suggested that the terrorist attack in Nice in which a large number of people were killed might give customers booking a weekend to Paris the right to cancel, ‘vicinity’ seemed to be a very long distance away even though technically it was in the same country.
As far as we aware there has never been a decided case to determine what this clause means and we would not advise you choosing to be a guinea pig to find out!
Some countries are imposing restrictions on arrival, Israel for example has introduced a compulsory 14 day quarantine for all arrivals, making the ability to run holidays entirely impossible. Although no European government has imposed a restriction on travel, this major change by Israel itself means no operator can now operate any planned tours as originally sold and must offer an alternative holiday or refund. This would apply to any other nation that decided, perhaps for good medical reasons, to restrict the movement of new arrivals. Equally, should the virus get out of control in the departing country, a government might impose a ban on all travel from that country. In that case operators could not offer any alternative and would have to offer a full refund.

Suppliers

If you are a supplier to the package travel market you are of course entitled to stick to your agreement with the buyer. However it is vital to consider your long term position, where customers are cancelling and paying charges to the organiser, it may well be justified to charge the organiser for no shows, but where there is evidence that the organiser is forced to allow free or reduced cancellation fees, you may wish to do the same. Those that insist on charging the full costs of services that are not actually provided, although legally entitled to do so, may well find in the longer-term organisers look to establish relationships with other suppliers.
It is clear the entire industry from travel agents, operators, airlines and other suppliers are going to suffer losses as a result of this outbreak. There is certainly evidence in Europe of not only a reluctance to travel in the immediate future, but more worryingly a fall in demand to book for future travel until this crisis is seen to be under control and this sudden loss of cash flow will undoubtedly impact every facet of the industry in the short term

Insurance

As a general rule a disinclination to travel will not create a right to claim on a policy of travel insurance. The Association of British Insurers has given this advice:
“If you travel against government advice then you are likely to invalidate your travel insurance. If unsure, then speak to your travel insurer. Travel insurance may cover non-refundable cancellation costs, in specific circumstances. These may include medical advice against you or a member of your group from travelling or government advice against travelling. Check your travel insurance policy for the scope of cover. Travel insurance is not designed to cover ‘disinclination to travel’ where the FCO advice has not changed to advise against travel. If you make alternative travel plans, then you may be able to transfer your travel insurance to cover your new destination.”