UK: The Bespoke Package - A Warning For Travel Agents

As if it is not hard enough for a travel agent to survive in the current economic climate, the European Court of Justice has now made matters demonstrably worse.

Council Directive 90/314/EEC of 13^th June 1990 on Package Travel, Package Holidays and Package Tours (OJ1990 L158 P59) ("the Directive") is intended to harmonise the laws, regulations and administrative provisions of the member states concerning package travel, holidays and tours sold or offered for sale within the Community. The Directive is addressed to the Member States which were required to implement its terms in national legislation. In the UK, this was done by means of the Package Travel, Package Holidays and Package Tours Regulations 1992 (SI1992/3288) ("the Regulations").

The essential effect of the Regulations (and the equivalent legislation of other Member States) is to render the agent liable for the individual elements of the package, despite the fact that those elements are commonly provided by unrelated third parties over which the agent has little, if any, effective control.

In circumstances where the Regulations (or their equivalents in other Member States) do not apply, the agent’s liability would generally be limited to cases in which the agent has been negligent in recommending a particular holiday to that particular consumer.

The definition of "package" has caused some difficulty and uncertainty in this context. The Directive provides that "package" means the pre-arranged combination of two or more of the following, when sold or offered for sale at an inclusive price, and when the service covers a period of more than 24 hours, or includes overnight accommodation:

1. Transport
2. Accommodation
3. Other tourist services not ancillary to transport or accommodation and accounting for a significant proportion of the package.

The separate billing of various components of the same package will not absolve the organiser or retailer from the obligations under the Directive.

At one extreme, it has always been accepted that the typical foreign beach holiday sold by one of the major tour operators through a brochure via the travel agency network or perhaps its website, even with the inclusion of optional extras, constitutes a package.

However in a judgment handed down on 30^th June in Case C-400/00 Club-Tour, Viagens e Turismo SA v Alberto Carlos Lobo Goncalves Garrido (a case, originating in Portugal, under the Portuguese equivalent of the Regulations) the ECJ has greatly extended the definition of package. In this particular case, the travel agent put the various components of the package together at the specific request of the consumer, so that the package as such did not exist until the travel agent, having taken instructions from the consumer, placed the booking.

The lesson of the case is that travel agents need to be absolutely sure that their own indemnity insurance is adequate to protect them in respect of packages, even when the consumer approaches them for assistance in making the booking in respect of travel facilities of which the travel agent was not previously aware.