European online threat
Holidaymakers booking online could be exposed to fraud or wind up stranded abroad when travel firms collapse, the Civil Aviation Authority fear. Their officials have told the Government that a proposed Brussels directive on e-commerce could be "extremely detrimental" to British consumers.
With the travel industry facing a continuing threat of bankruptcies, the warning comes at a sensitive time. As it stands, the Brussels move will allow companies based in other European countries, where consumer protection is weaker than in the UK, to sell holidays starting in Britain. The danger is that travellers could book air packages with tour operators that are not licensed to operate them under British law, with the risk that they could lose money if those firms go bust - or simply vanish. Most people shopping on the web pay by credit card. Provided their purchase is worth £100 or more, they are refunded under the terms of the Consumer Credit Act, but that might not cover booking deposits, which are often less than the minimum.
If such an operator were to fail with customers already abroad, they would be left outside the financial safety net that is part of the UK's air travel organisers' licensing (ATOL) system. That net ensures that cash is available to pay hoteliers, and that flights are provided to get affected holidaymakers home.
In what might appear to the rational observer as a legal Catch 22, Department of Trade and Industry lawyers believe the EU directive, which is due to take effect in January, applies to the act of selling travel online but not to that of operating it, which would still be subject to UK law. But even if an operator in, say, Greece, were to sell a holiday which it was not legally entitled to operate from the UK, the CAA would face a major problem catching and stopping them.
Its consumer protection group is also deeply concerned that the EU move could bewilder consumers for whom current UK holiday protection law is already confusing enough. As it is, they are faced with two parallel systems: the ATOL net, which covers those people buying inclusive air holidays and some, but by no means all, of those buying scheduled flights. And the Package Travel Regulations, which require all holiday firms offering inclusive deals to ensure that if they go under, customers get their money back, but which are harder to police and easier to evade.
The Authority has been worried for some time by the large number of British-based firms advertising air holidays which are either unlicensed or do not make it clear that they are on their website home pages. The EU move would compound the problem.
The best hope, say officials, is that travel can be exempted from the directive under a provision that allows for exceptions for the purpose of consumer protection. This appears to be a legal possibility because, for the most part, the ATOL system implements EU legislation. But protection for travellers buying cheap flights, which are not part of packages, falls outside EU legislation, so it is likely that could not be exempted.
However flawed, exemption may be the best solution, As the CAA puts it, there is no other option - apart from an interpretation that travel is not within the Directive's scope at all - "that would not be extremely detrimental to the UK travel consumer".
