Update (26 November, 2009) The CAA has confirmed it will appeal against the judgement reported below
Pressure for a change in the law on financial protection for customers if holiday firms which go bust has intensified with a landmark London court decision.
A Judge at Westminster Magistrates Court has ruled that on line company Travel Republic was not breaking the law by selling flights, hotels and other holiday components without an ATOL )air travel organisers licence).
Under existing regulations, firms selling packages must take out ATOLs, to ensure customers do not lose money if they go under. The issue before the court was one which has long vexed the travel business and its regulators: what exactly constitutes a package?
District Judge Nicholas Evans ruled Travel Republic was not selling packages as currently defined by law. The firm's customers were free to book a flight or a hotel room from its website or go away and try to find a better deal on either – or both – somewhere else.
He said the Civil Aviation Authority, which brought the prosecution, had failed to prove Travel Republic offered or sold anything other than separate components. Nor had it satisfied him beyond reasonable doubt that the company had made available - to any of the customers named in the charge - flights which qualified as components of packages.
The problem underlying this case is that the present law, drawn up almost two decades ago, is designed to cover traditional, pre-arranged brochure based package holidays sold direct or through bricks and mortar High Street travel agencies. The spread of on line availability, which has prompted more and more holidaymakers to use web sites which allow them marry flights and accommodation a la carte has rendered the law partly obsolete. One area of contention is low cost airline sites where passengers can click through from a home page and book extras – not just hotels but other important service such as car hire. Many observers think such arrangements should always be covered – as they are if you select a flight plus hotel on British Airways' home page, for example.
ABTA ( Association of British Travel Agents) has already proposed a “flight plus” regulation designed to solve the problem. The travel industry is about to embark on a consultation which may persuade the Government to update the law. At the same time the EU is looking at revising the rules which led to present law being enacted. As a result of all this the regulations may be changed to get ride of the requirement that a package must pre-arranged and sold at an inclusive price.
In his decision the Judge noted: “I sense there is a widespread view, held throughout the travel industry, that the current regulations are unsatisfactory”.