When is a package not a package?
This is at the core of the argument now being hotly debated in the UK. At the centre of the battle is the case of CAA v Travel Republic and Kane Pirie (TR's Managing Director).
The case was brought by the UK's regulatory body the CAA (Civil Aviation Authority) who is the official regulator for a number of things in the UK including Passenger Safety and the bonding of sellers of products (typically Tour Operators) through its ATOL licensing scheme.
The pursuit of Travel Republic is seen as a test case for the CAA in enforcing its recently broader based view that virtually all holiday sales of flights plus accommodation require ATOL cover. Dynamic packaging has been around for a while - some might say it rose to prominence about 5 years ago but the practice of bundling products has been around for years. The CAA and the bonding process in general has been viewed as inadequate especially following the very high profile collapse of the XL group in 2008. So why now and why pursue Travel Republic?
The answer lies in the contested issue of whether regulations cover the sale of "all" travel products. Further with concentration in the intermediary channels - there is a need for the CAA to get tougher. But there is another reason. The CAA's bond pool has been sorely tested by the recent demise of many retailers and wholesalers. Some have indicated that the bond pool may indeed be under water. The CAA has tried in recent years to broaden the pool by offering smaller retailers reduced rate schemes. Of course the real target are the Online Travel Agencies particularly Expedia. So it is a market dynamic issue that pits the traditional wholesalers (now largely concentrated among a few players) vs the OTAs and the consolidators. Also at stake is a possible advantage commercially in how the VAT is treated.
The case was filed in a lower court - Westminster Magistrates and was moved to Stratford before district judge Nicholas Evans - and TR/Pirie were both charged with 20 counts each of breaching the 1995 regulations. it was clear at the time that the case would ultimately end up in a higher court maybe even all the way to Europe's highest court.
Well Round 1 went to Travel Republic on November 11th.
The following day a number of comments were published by the UK's TTG. Check here to read them.
No one really denies Travel Republic has the best intentions at heart despite the stream of vitriol from the Government's QC who compared Pirie personally to Bernie Madoff. However this is a case that will run and run.
Ultimately we can speculate that if TR is successful - then the government will have to mandate a new scheme for consumer protection. However the government seems to have already jumped the gun by raising the APD much higher. While ostensibly a fee related to Aviation uses it is regarded more as a straight revenue tax to help HM Government pay its somewhat large (and growing) total revenue shortfall.
But caveat emptor is always the case. Should the Government win in the ultimate battle - then the face of consumer protection across Europe will change.
Gotta love those lawyers!
Cheers
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