John Cox, chairman of the Air Travel Insolvency Protection Advisory Committee (ATIPAC), said: ‘How does a customer unfortunate enough to have their travel company go bankrupt navigate a situation where the company may not be established in the UK? How do you ensure the customer is adequately protected?’
The directive, due to come into force in 2017, will move responsibility for regulation from the country where a holiday is sold to the jurisdiction in which the holiday company is ‘established’.
Mr Cox said: ‘You could have a UK customer of a tour operator based in any member state. We have to take it on trust that the regulator in that state has been as rigorous as it should be.’
In its annual report, ATIPAC warned: ‘It will require strict enforcement from the European Commission to ensure protection is consistently applied. If there is an insolvency, who does the customer contact? This has the potential for real disadvantage. Confusion is almost a certain. History does not inspire me with confidence.’
ATIPAC looked into the Spanish system after Low Cost Holidays re-located to Majorca in November 2013, and found: ‘Responsibility [in Spain] is delegated to regional governments. It would mean consumers having to go through the Spanish court system to establish a claim, and there is no fund to pay for repatriation or refunds.
‘Most tour operators will maintain businesses in different member states to take advantage of re-assuring customers that the local scheme applies. But where that is not the case, how is the consumer expected to understand how the scheme applies and how to make a claim? What is the process? You can imagine all kinds of claims management companies being established to deal with this. We can see Citizens Advice being inundated as soon as a company fails.’
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