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Consumer Council for Northern Ireland response to the ... · Consumer Council for Northern Ireland response to the Department for Transport ATOL Reform Consultation Document September

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Page 1: Consumer Council for Northern Ireland response to the ... · Consumer Council for Northern Ireland response to the Department for Transport ATOL Reform Consultation Document September

Consumer Council for Northern Ireland response to the Department for Transport ATOL Reform Consultation Document September 2011 The Consumer Council for Northern Ireland (CCNI) welcomes the opportunity to respond to the Department for Transport consultation on ATOL reform. CCNI has statutory responsibility under the General Consumer Council (Northern Ireland) Order 1984 to represent the interests of passengers travelling to from and within Northern Ireland. Whilst the Consumer Council provides guidance and advice to passengers travelling on flights operated by charter airlines, the complaints handling role of the Council is limited to receiving complaints from passengers travelling by scheduled carriers. The Consumer Council responded to the previous Government’s consultation on Regulating Air Transport, welcoming the recommendation that Flight-Plus products should fall within the scope of the ATOL scheme. CCNI also indicated its support for the proposal to introduce a standard ATOL Certificate for consumers who have purchased ATOL protected holidays. The development of the market for air holidays since the introduction of ATOL in the 1970s has undoubtedly led to increased choice for consumers. It is essential, however, that the ATOL scheme is amended to ensure widespread protection against airline insolvency is provided for consumers to reflect the nature of today’s air travel market. CCNI supports the introduction of new secondary legislation to amend the ATOL regulations and introduce a new category of Flight-plus into the ATOL scheme. CCNI agrees with the proposed definition of a Flight Plus booking as set out in draft regulation 22, with the exception that the draft regulation permits too short a time period for purchasing the various elements of a Flight-Plus booking. CCNI believes that the focus of any amendment to the ATOL scheme should be to maximise the protection afforded to consumers. CCNI considers it irrelevant whether or not purchasing hotel accommodation, for example, two weeks after buying a flight would be regarded by consumers as constituting a package holiday in the standard sense. Given the manner in which consumers book holidays has changed and the Department aims to reform ATOL to reflect these changes, the aim should be to include as many consumers within the ATOL scheme as possible rather than restricting the scheme’s scope. CCNI therefore believes that the Department should permit an open-ended arrangement under which consumers should be allowed to

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purchase additional services to constitute a Flight-Plus arrangement at any stage up until the time of travel. CCNI supports the proposed definition of a Flight-Plus arranger in draft regulation 23 believing it is important that the definition of Flight-Plus arranger is as wide as possible to provide maximum protection for consumers. CCNI does not object to the proposal that in future the Flight-Plus arranger would be responsible for arrangements to provide repatriation to customers abroad or refunds to passengers with a forward booking when ATOL licensed businesses supplying flights become insolvent. However, it is essential that customers purchasing holidays from Flight-Plus arrangers provide this information to their customers in a standardised, easily understandable format to prevent confusion on the part of consumers. CCNI also believes it is unfair that consumers will be charged two APC payments for Flight-Plus holidays where the flight is provided by another ATOL licensed business on a retail basis. CCNI agrees with the proposal that serious breaches of the draft regulation, such as a business misrepresenting that they hold an ATOL licence, should be punishable by a fine or up to two years in prison or both. However, CCNI queries whether the proposal that less serious breaches of the draft regulation should be punishable by a fine of up to £5,000 is a sufficient deterrent. CCNI would also support the proposal that the draft regulations should be designated so that civil enforcement action could be taken by the CAA using the procedures in Part 8 of the Enterprise Act 2002 to allow the CAA greater flexibility to deal with non-compliant businesses. CCNI supports the Northern Ireland Executive in its decision that the draft regulations should apply in Northern Ireland as they do in the other parts of the UK. This will provide uniform protection for air travellers across the UK, ensuring clarity and equality of protection for consumers. CCNI opposes the proposal that micro businesses and start ups should be exempt from the parts of the draft regulations dealing with Flight-Plus. Providing an exemption for these types of business will create an inconsistent and confusing message for consumers regarding the scope of ATOL protection. CCNI is concerned that the proposal to amend ATOL protection for Flight-Only sales so that consumers who book a Flight-Only could no longer claim a refund for advance bookings in the event of an ATOL holder’s insolvency may limit protection for some consumers. CCNI believes it is important that choice is maximised for consumers and that this proposal, if taken forward, would reduce the consumer protection available for Flight-Only purchases. CCNI accepts the Department’s proposal to introduce a “right to fly provider” structure under which consumers that have paid for Flight-Only tickets are provided with documentation that gives them the right to travel on a specified flight without any further payment if the travel agent that issued the ticket fails. It is essential that clear, easily understandable information in a standardised

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format is provided to passengers that make a booking with a “right to fly provider” to ensure passengers are fully aware of their entitlements. CCNI supports the Department in its intention to replace the current arrangements so as to give consumers clear, standardised information when they buy an ATOL protected holiday or flight. In order to avoid confusion amongst passengers following any future tour operator or airline failures, CCNI believes it is essential that all agents selling air holidays and charter flights are required to provide ATOL certificates to passengers. Passengers should also be informed by the seller under which company’s ATOL the holiday is protected. CCNI is aware of cases in which ATOL protected consumers have faced uncertainty when seeking to book alternative travel arrangements following the failure of their tour operator. The uncertainty was due to the lack of a timescale for reimbursement of consumers’ money, preventing them from booking alternative travel as they did not know how long they would have to wait until the funds became available. CCNI therefore believes a timescale should be determined within which passenger refunds must be paid to enable them to rebook an alternative holiday if their tour operator or airline fails before they travel. When providing ATOL certificates, sellers should be required to inform customers to retain the information provided to support any future claims. Records of ATOL protected holidays sold should also be submitted to the CAA at the time of sale to ensure consumers who have not kept copies of their ATOL documentation are still able to apply for a refund. It is important that the CAA makes information available to passengers in instances of tour operator or airline failure to ensure passengers are aware of their entitlements and how to apply for refund of their booking. Clear, easily understandable information should be provided on the CAA website. Information should also be available to passengers by telephone. The CAA should ensure sufficient staff resources are available to meet high volumes of telephone calls from passengers affected in instances of tour operator or airline failure. CCNI believes Government should take action under the Consumer Protection from Unfair Trading Draft regulations 2008 against retailers that sell holidays on an agent for the consumer basis without informing consumers that the purchase is not protected under the ATOL scheme. Furthermore, to prevent confusion for consumers and extend consumer protection, CCNI encourages Government to amend the relevant primary legislation to bring agent for the consumer sales within ATOL. CCNI would welcome the introduction of new primary legislation requiring all airline package holiday and Flight-Plus sales to be ATOL protected on the basis that this would provide greater clarity for consumers about financial protection for holidays. However, CCNI has concerns regarding the potential for introducing airline insolvency protection for airline Flight-Only sales either

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via ATOL, the revised Package Travel Directive or another means. Approximately 75% of passengers travelling through Northern Ireland airports are travelling to or from another UK airport1. Requiring passengers travelling on scheduled services operating to and from Northern Ireland would cost consumers in the region at least an additional £8.2 million per year2. This would be an unnecessary financial burden given the limited risk of airline insolvency for the majority of Northern Ireland air passengers. If you require further information or wish to discuss any of the issues raised in this response please contact Scott Kennerley on 028 90672488 or [email protected].

1 Based on 2010 passenger statistics provided by the Civil Aviation Authority. 2 Based on 2010 passenger statistics provided by the Civil Aviation Authority and the assumption that all passenger movements were as part of return flights.