‘Click-throughs’ to escape long arm of European regulators

By Travolution
By Travolution
January 23, 2013 02:14 PM GMT

Click-through sales of travel product are to escape the long arm of European regulators, the UK government has indicated.

The European Commission is currently in the process of updating the Package Travel Directive, the legislation that underpins member states’ rules on financial protection, including UK’s Atol system.

Consumer affairs minister Jo Swinson, in a response to a request for domestic package holidays to be left out of the PTD by former tourism minister John Penrose, said: “The latest indication we have had from the Commission is that, because they are very keen to make quick progress it is unlikely that they will propose radical change to the shape of the directive.

“We think this will mean that they will not think to include the click-through model in the definition of a “package”, preferring instead to propose an information requirement to warn consumers that they will not benefit from the added protections in the directive and should consider insuring.

“This is because with the click-through model there is unlikely to be a single entity at the heart of the arrangement, contractually, onto which the liability responsibilities could fairly be imposed.”

So, good news for the growing number of airline sites that encourage users to click away to a third party site to buy other elements of their trip like car hire or accommodation to go with their flight.

But for many other online travel agents there appears to be little prospect of the PTD not being extended to cover their business models.

Swinson continued: “We expect the Commission to include in the definition those methods of booking holidays which are known as ‘dynamic packages’ where there is a single entity facilitating the creation of the ‘package’ and which accepts the payment, irrespective of the contractual or agency arrangements behind the ‘product’.”

This prospect has raised alarm among the UK’s independent online agents and component suppliers like Travel Republic, On The Beach, Lowcost Holiday Group and the On Holiday Group.

As a result they have threatened to break away from trade association Abta to form a group called the Association of Travel Agents, after it was claimed Abta's lobbying effort in Brussels was in favour of an extension of the PTD.

No firm proposals have been put forward from the Commission, but a first draft of the new legislation is expected in March.

Swinson made the UK government’s negotiating position clear on the issue:

“We will need to see precisely what the Commission proposes, and its justification in its impact assessment, before setting our negotiation position, but we will continue to argue in negotiations that the new directive should not place burdens on businesses where there is little evidence that it adds real value for consumers or business.

“Getting the definition of a package right is crucial in terms of achieving the correct balance.

“I appreciate that there may be benefits for the industry if ‘other tourist services’ were left out altogether and we would certainly like to see this element clarified.

“We must also bear in mind that these other elements sometimes account for a considerable proportion of the cost of a holiday - for example car hire or ski passes.

“The route to ensuring this element is rationalised and proportionate might be, therefore, to seek to apply it only to specific arrangements and where the cost justifies it. This would provide for more certainty for business and would also result in removing unnecessary coverage.

“We need to consider also that the directive provides that consumers are able to look to the organiser, usually in their home state, to be responsible for the whole arrangement, including those elements provided by third parties abroad.

“This is a valuable protection for consumers who are able to seek recompense from entities in their home state and is, we believe, a strong driver for the industry to ensure that it sells arrangements from reliable providers.

“We will be consulting on the proposal when it is published with a view to informing our negotiating position and the industry and others will be able to feed into that process.”

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