Consumer rights under the Package Travel Regulations: a point of view
There has been a lot of noise in the press recently about the issue of refunds and consumer rights in the face of the Covid-19 pandemic. Below is our latest update, including an explanation not just of the approach we at Pura Aventura are taking but also a plea for patience and understanding on behalf of our industry colleagues.
European Package Travel Regulations
The PTRs as they are known, have never been so famous. These are the laws which exist to protect customer rights and govern the responsibilities of tour operators and travel companies in relation to their customers. Please note that these rights apply to all clients of UK tour operators - wherever you are based, your contract exists in the UK and therefore your rights are the same whether you live in London or Buenos Aires or Hong Kong.
A key part of the protection they offer is that, in the event of a major event or FCO (Foreign & Commonwealth Office) travel advisory, the travel organiser has a duty to either defer the trip, change the destination or issue a full, cash refund to customers within 14 days. You can read a bit more about them here: FCO travel advisories
No laws or regulations were ever designed for this scale of disruption. Of course, changing your holiday destination is irrelevant right now, there's nowhere any of us can go. Deferring is fantastic and the best all round for our industry both at home and overseas where it supports more employment than any other industry on our planet.
But deferring is not always an option for people so the refund is a keystone of the PTRs. The problem is really with the obligation to make this happen within 14 days. Current events make this patently unrealistic for many, if not most travel companies.
What are Pura Aventura doing for their clients?
The summary is that we are deferring or refunding all client trips, in accordance with our duties under the PTRs. The only divergence is that it's taking us longer than 14 days in some/most instances just to be sure that everything has been done correctly.
This message sent round in the third week of April probably explains things as well as they can be explained - from our perspective. The way we work is very detailed, unusually complicated to put together and therefore quite tricky to deconstruct again.
Before we head into another week of lockdown, I wanted to take a moment to share with you what's going on with us at Pura, to explain the work we are doing, and to thank you for your patience during this time.
None of this is designed to elicit pity, the complexity of our work is what makes our trips special and what makes us proud of what we do. However, it does mean that we are in an unusually complex administrative place. To rush things would be to invite problems further down the line and I think we've had enough of those this past month to last a lifetime, or two.
With the office closed, we are working from our homes across southern England, France, Spain & Chile. Our systems are well set up for remote working but there can be issues with effectively handling and transferring phone calls internally. In general, email is best in the first instance, for now at least. Note that we are monitoring each others' emails so a message sent to david@ might prompt a response from sarah@ but don't worry, that is because we are trying to maintain a single view of any given client's situation.
Nevertheless, I know that we will, at times, be slower in responding than any of us would want, for this reason it might be helpful for you to understand some of the different moving parts we are managing. Because we work directly with near all of our overseas partners, any given trip is a highly complex project with many suppliers - usually small scale and personally connected to us. It is a highly complex situation and one which we are handling cautiously in order to avoid problems further down the line.
One aspect of this relates to bookings and payments from and to our clients. Mostly those involve some monies being returned with another sum being kept on account for future travel. In order to ensure that those funds remain fully protected under consumer protection legislation, we are recreating trips on future dates - some real dates, in which case we are re-booking and confirming all services again, and some are on 'holding' dates, in those cases where clients know they want to travel in future but don't yet have a sense of when. For this latter category of clients, we have to be sure that their tours are clearly labelled in order to then revisit them and create 'real' trips again without ever breaking the chain of consumer protection.
Of course, each trip cancelled, re-booked or suspended waiting for dates to be selected, involves going to our partners. With each of these we are taking time to establish what is being carried forwards on account for us, what is being returned to us and what is being kept by them. In any tour, there will likely be payments which belong in each of these three categories.
Finally, when you book a trip with us, we forward buy the necessary currency in order to be able to guarantee the price you pay. We are not currency speculators, never have been, never will be. However, in these extraordinary times, it means we have many currency 'forwards' which are due to mature at times when no tours are happening. Those contracts all have to be reset in order to be able to carry over prices to the new dates. Or draw them down and sell them back to the open market.
That's all really, a thank you for patience you have already shown and an explanation for you to hopefully grant us more patience as we work cautiously in a way which protects our clients, our partners and our team.
We'll be getting onto your specific trip very soon, reconfirming dates and getting refunds arranged but thought that you might find this message helpful in some way, at least to understand or appreciate why it might take longer to process things than might seem necessary.
What are other travel companies doing for their clients?
Of course, we don't actually know. Well, we know what some are up to but not what most are doing. The point to be made here is that no travel company that I am aware of is asking to be absolved of the duty to issue refunds under the PTRs - they are simply asking for more time.
In at least 10 other European countries, the PTRs have been amended precisely to buy time for travel organisers. The UK Government has yet to move but the pressure is building.
Travel protection bodies, such as ABTOT and ABTA, have even go so far as to create their own Refund Credit Notes (RCN) in order to help their members survive. These are, in effect, promissory notes to the value of the full refund but which have a deferred date on them - up to 31 March, 2021. It's basically an IOU but one which is fully backed by insurance bonds. They are gold-plated IOUs. If you don't get your money back by next March then, in effect, your travel company is insolvent and you will be paid by the insurers.
The reason that many of these tour operators simply don't have your cash to hand is that they have pre-paid services for your tour - often a large amount to an airline and a large invoice to a local agent. That money is, at best, eventually going to make its way back to the tour operator. Alternatively, it might be made available as a credit against future business. Much of the money is being kept by local agents who are calling force majeure and keeping the money.
Add to this the fact that a tour operator's duties under the PTRs is to follow FCO advice - usually issued on a rolling 3-4 week basis. Anything beyond that window is still potentially a live booking - in normal times. During this pandemic, airlines have grounded fleets for periods extending weeks and months into the future. This means that trips which otherwise might have had a realistic chance of operating, are having to be cancelled. In effect, airlines are significantly extending the liabilities of tour operators.
Meanwhile, back in the UK tour operator office - cash tied up for potentially many, many months overseas is due back within 14 days to clients. And that means that every holiday has to be paid for twice - both times by the tour operator from operating cash. That's a tall order for any business in any sector.
If the above helps you to at least understand that your travel company is unlikely to be sitting at a desk clinging onto an envelope full of your money, refusing to hand it back then my work here is done.
You might have a better or worse relationship with your tour operator. Your tour operator might be better or worse run, better or worse capitalised. However, it really doesn't matter how good the company is, this event has put catastrophic strains on the industry from top to bottom.
We're lucky, for now
At Pura Aventura, we are lucky (so far) because we have very limited exposure to long-haul flights. Because prices are the same or lower and the customer service better for clients booking direct, that’s what most of our customers do - with our support and advice at all times.
We also have very limited exposure to rogue behaviour or bankruptcy of local agents. Since we book most services direct, our risk is hugely diversified. More importantly though, our local partners (guides, hotels, restaurants, drivers, etc.) are just that: partners. We are in constant contact and do our best to look after them - for instance, we know if our guides in Portugal have enough money for their mortgage payments, or how many months a particular lodge can afford to be closed. If there is a need to move money around, we can do something to help because we are a team - without our network of partners overseas, we are nothing.
And these aren’t just cheap words, we live by them. Here’s a message, sent this past week, from a lodge in Chilean Patagonia which has, sadly, had to close its doors for good. It is a place we used really only from time to time but we did have a bit of money on account with them.
We appreciate deeply your kind words and thank you for not have us make the reimbursement, it is a relief since we have to deal with a lot of unavoidable issues related to the shutdown of our operations. Should we find a new investor or partner in the future in order to reopen this daring venture in beautiful Patagonia it will be a great pleasure to work again with such fine partners as you are.
The way we choose to operate makes our holidays more interesting, connected and sustainable. It allows us to tailor to a degree most others can only dream of. In the current climate it also means we are not having to lean on the RCN scheme to ease our cashflow because we don't have anything like the same scale of double-whammy cash hit as most tour operators.
What it doesn't mean is that other tour operators were doing it wrong. The RCN is a necessary pressure release for most travel companies in this country, it is not an attempt to evade responsibility or duty of care. It is a gold-plated IOU. If you are offered one, it is no reflection on the company offering it to you. If you can afford to wait for your money - please do so. If you can't afford to wait until next March but can afford to wait until October - ask them. As I say, nobody that I know of is trying to pull a fast one, they are trying to protect their people.
At Pura, we’ll continue to do what we have always done: we will plan, we will be cautious, we will be ambitious and creative. We will avoid hubris. We will be kind, continuing to look after our people to the very best of our ability. That’s our team, our community, our clients and our partners overseas. We will also continue to look after our planet because our commitment to 1% for the Planet and our Travel Positive initiative is unwavering.