UK: Government Launches Consultation On Implementing The New Package Travel Directive

Last Updated: 10 November 2016
Article by Rhys Griffiths

The new Package Travel Directive ("New PTD") was formally adopted by the EU on 25 November 2015.  It represents the biggest change in the regulation of package holidays since the introduction of the original Package Travel Directive in 1990 ("Old PTD").  It significantly increases the footprint of what is a "package", as well as introducing a concept of "package lite" known as Linked Travel Arrangements ("LTAs").  Click here for a fuller briefing on the key changes which will be put on the statute books by 1 January 2018 and in force from 1 July 2018. 

Ever since adoption of the New PTD, the UK's travel industry has been waiting patiently for the Government to launch its consultation on how it should be implemented.  The industry were told in May 2016 to expect a split consultation, launched either side of the summer, but the intervening Brexit referendum brought that wish to an abrupt end.   At long last, on 28 October 2016 the Department for Transport ("DfT") launched the first part of its consultation, which is focussed only on how the ATOL scheme should be changed in order to implement the New PTD (see here).  Here is what you need to know about it.

A rushed consultation

The first point to note is that there is not long to respond.  The consultation will close at midnight on 24 November 2016, which gives interested parties a mere 4 weeks to respond.  This is much shorter than the usual 12 week period given in previous ATOL consultations, for instance the 2014 ATOL rebalancing consultation, the 2013 call for evidence on ATOL reform and the 2011 consultation on bringing flight-plus within the ATOL scheme. No doubt the Government is concerned that the delay in starting to consult means that there is now not long to consult, draft the relevant legislation and get it through Parliament by 1 January 2018.

Those wanting to shape the future of ATOL will need to react quickly, both in response to this consultation and the remaining legislative process.  For larger organisations or associations which need to consult with their stakeholders, this will not be easy, particularly if there is a desire to consult and consider the proposals comprehensively and carry out some financial modelling on the likely impact of the changes.

A limited consultation

The short timeframe for implementation of the New PTD, and the uncertainty surrounding the UK's relationship with the EU post-Brexit, means that the Government is going to make the barest of changes to the ATOL scheme.  It is only going to make those changes which are absolutely necessary to implement the New PTD.  It will therefore push off consideration of wider structural changes to ATOL and its long stated desire to move responsibility for insolvency protection from the Government to the industry.  It will also leave to another day dealing with some of the inconsistencies and inefficiencies which are inherent in the ATOL scheme.

The consultation identifies some of the issues for consideration in the future and seeks views from the industry, which include:

(1)  If the new rules on the mutual recognition of insolvency protection regimes lead to enhanced risks to the Air Travel Trust (e.g. an ATOL holder significantly increasing its volume of licensable transactions by using its ATOL for all EU sales) then the CAA may seek additional financial security from that business over and above its APC payments.

(2)  The replacement of the current £2.50 flat levy for APC payments with a variable levy which is calculated by reference to the risk of the particular travel company.

(3)  Making the travel market more appealing to the finance sector so that it is more attracted to taking on responsibility for providing a market-based insolvency protection regime, possibly by (a) separating the repatriation and refund obligations, so that refunds are handled by some market-based solution and repatriation is handled by the CAA through the ATOL scheme; or (b) placing restrictions on when companies can take final balances e.g. four weeks before a holiday taking place.

(4)  Streamlining regulation and regulators so that we do not have the current split system between flight-inclusive packages and non-flight packages.

(5)  Tackling the inconsistent way in which the insolvency protection rules apply to the sale of flight-only, where some businesses must ensure that such sales are ATOL protected, whereas other businesses (e.g. the Airlines themselves) are not required to have ATOL protection.

(6)  Tackling the issue of overlapping financial protections which exist between the ATOL scheme and section 75 of the consumer credit act, which can lead to increase costs for travel companies and confusion on the part of the consumer.

In addition, as the focus in this consultation is the ATOL scheme, it does not address how the rest of the New PTD should be implemented.  The industry will therefore have to wait to be consulted on all other issues which do not concern insolvency protection for flight-inclusive packages, including the concept of Linked Travel Arrangement and how it should work in practice.  This further consultation will follow "in due course".

So, what changes will be made to the ATOL scheme?

Should ATOL be abolished?

It is heresy for some, but the consultation makes the point that the ATOL scheme is not mandated by the Old PTD, or the New PTD, and so should it be retained?  Alternatively, should there be some other scheme, whether run by the Government or a market-driven solution such as bonding or insurance?

Whilst the consultation flirts with the idea of abolishing ATOL, it soon rows back from it for the reasons set out above – there is simply not enough time to consider this option and for businesses to adjust before the deadline for implementation of the New PTD.  Nevertheless, the DfT does tantalisingly promise to consider the abolition of ATOL in the place of some other scheme in the long term.

Expanded definition of a package

The DfT is intending to copy and paste the New PTD definition of a "package" into the ATOL Regulations.  This definition is very broad and will include practically all scenarios in which a consumer buys multiple travel components from a travel company at the same time.  It will catch traditional packages, flight-plus and even some click-through sales.
The DfT will also finally close off the gap in the current ATOL scheme whereby travel agents selling as an "agent for the consumer" technically fall outside the ATOL Regulations, but which agree to abide by the AOL Regulations in return for a 50% rebate on their APC payments.  This gap will be closed where the travel agent is selling multiple travel components because such sales will be a "package" under the New PTD and will therefore fall squarely within the ATOL scheme.

What about LTAs?

Interestingly, the DfT may decide not to include LTAs (which include a flight) within the ATOL scheme.  It has asked for views on whether LTAs should be within the ATOL scheme, or whether they should be protected by some market-based solution.  It appears that the DfT's concern is the pollution of the ATOL brand.  This is because only the flight element sold by the first trader would be financially protected and not any subsequent components bought by the consumer.  This is different to packages, where the entire package is financially protected.  Accordingly, by using the ATOL brand to protect both, the customer may wrongly believe that the entire LTA is financially protected.

Mutual recognition of insolvency protection regimes

In line with the rules of the New PTD, the DfT is intending to include within the ATOL scheme all flight-inclusive package sales made by travel companies established in the UK, whether those sales are made to customers in the UK or other Member States of the EU.  This would therefore allow travel companies established in the UK to use their ATOL to cover all EU-wide sales, without needing to comply with the insolvency protection rules of any other Member State.

However, this is not without its problems and the DfT is clearly nervous about the potential exposure to the Air Travel Trust in dealing with foreign consumers.  If a UK-established travel company trading under its ATOL goes bust, leaving thousands of German customers stranded in Mexico, how will it arrange for them to be repatriated?  The DfT's answer may be not to arrange repatriation but merely to offer a refund.  This is not a very neighbourly thing to do.

No place for trust accounts?

The consultation refers throughout to the desire for market-based solutions for insolvency protection if and when the ATOL scheme does not apply.  Reference is made to such solutions potentially being provided by bonds and insurance by way of example, but no mention is made whatsoever to the use of trust accounts.  Why not?  It is specifically permitted as a form of insolvency protection under the Package Travel Regulations (along with bonds and insurance), and is currently used by number of travel agents and larger associations as part of their ATOL arrangements and also to protect non-flight packages.  One would expect some public discussion, consultation and analysis of this as a potential market-based solution.


At long last, the UK's consultation on implementation of the New PTD has begun.  It is limited in scope, but offers clear indications about how the ATOL scheme will be changed.  Promises are made about a more detailed root and branch review of the ATOL scheme in the future, and views are sought, but it remains to be seen whether there is the political will and ambition to see through such significant changes in the immediate future given the scale of other more pressing matters for the Government in extracting the UK from the EU.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.