This article has been written by Matthew Ford of BLM, and Sarah Prager and Richard Collier of 1 Chancery Lane.
What are the potential difficulties tour operators might face if there is further disruption to holidays as a result of a second spike in COVID-19 infections?
As we write, the country – indeed the world – is transitioning, with no small amount of confusion, caution and political capriciousness, away from the darkest and most restrictive days of lockdown, and towards some semblance of civilisational normality. Part of the light we see at the end of this hitherto seemingly unending tunnel is the growing prospect of countries (albeit in a wildly differential, and realpolitik-driven, series of spluttering fits and starts) reopening, and international travel recommencing. This is a topic covered regularly in the 1 Chancery Lane Weekly Briefing, and requires no further expansion now.
This particular article looks at the potential complications arising as a result of the consumer protections contained in the Package Travel Regulations 2018 in the context of post-COVID travel, though suffice to say this is not the whole of the altogether messy picture, and the operation of the doctrines of frustration and force majeure in the context of accommodation-only bookings deserves consideration in a further article in its own right.
Holidaymakers seeking to travel this summer will fall into two main groups; those who made bookings prior to the COVID-19 outbreak, whose holidays may now be viable, and those now booking holidays, post-, or perhaps more accurately, during the outbreak.
Practitioners will be aware that a myriad of problems arise.
FCO guidance: First, notwithstanding rumours that the FCO guidance will change imminently, as at time of writing it continues to advise against all but essential foreign travel. As a result, most, if not all, travel insurance policies will not be valid for those holidaymakers seeking to travel in the face of the advice.
Closure of tourist attractions: Secondly, although destination countries may formally have reopened, some businesses and tourist attractions may remain shut, or very restricted to access. As such, visitors may feel they are unable to get what they wanted from the holiday, possibly to such an extent that the holiday is rendered pointless. For example, the unfortunate tourist who booked a package holiday to Naples specifically in order to visit Pompeii and Herculaneum may well be able to fly to Naples and may even be accommodated at his or her chosen hotel; but the attraction which underpins the trip may not be open, or may be subject to restricted access.
Lockdown measures: Thirdly, and perhaps most worryingly, the clinical situation may change. Parts of the world may suffer a second spike, leading to reinstatement of lockdown measures in respect of particular services or facilities (for example restaurants or visitor attractions), or holiday hotspots (as we have seen recently in Leicester – not a holiday hotspot, precisely, but now subject to more stringent lockdown measures).
Tour operators’ right & obligations
Tour operators’ rights and obligations in this regard are largely governed by the Package Travel and Linked Travel Arrangements Regulations 2018.
Regulation 11 governs the situation where a change which is ‘insignificant’ has to be made prior to the commencement of the holiday. Where this is the case, and if the contract between the parties so allows, the tour operator may make the alteration, but only if it informs the traveller of the alteration by way of a durable medium – ie, in writing.
Where the proposed alteration is not insignificant, however, the tour operator will be in breach of the holiday contract unless it “is constrained by circumstances beyond the control of the organiser to alter significantly any of the main characteristics of the travel services”, in which case it must offer the traveller the choice of a variety of alternatives including a substitute package or a refund. Where the contract must be terminated altogether, because the holiday simply cannot take place at all, Regulation 14 is engaged, and the tour operator must provide the holidaymaker with a full refund, together with compensation, unless the termination is due either to lack of numbers or to “unavoidable and extraordinary circumstances”, in which case the tour operator may provide a full refund, but need not compensate the traveller in addition.
In the current climate, both consumers and organisers will be interested to know that any such refund must be made within 14 days of termination (cf Regulation 14(3)). There is no exception to this rule and the British government, unlike some other European governments, has not extended this timeframe.
Changing the terms of a holiday contract
The first question for the organiser considering whether to alter a term of the holiday contract is therefore whether the alteration is significant or not; if so, it may impose it, but if not, it must offer the traveller a refund. For example, if a package holiday trip was sold as a multi-stop tour, such as a ‘city-hopping’ experience, would it be a significant alteration if a number – but not all – of the cities could not be visited? Or an adventure-sport holiday where some of the sports are now infeasible? Readers will be dissatisfied, but perhaps not surprised, to learn that the authors cannot give a ‘one size fits all’ answer to these questions; whether an alteration is significant will be entirely fact dependent. It is generally accepted that an alteration in point of departure or arrival will not be significant if the traveller departs from or arrives at the same city, so an alteration from London Heathrow to London Luton is fine; as is substitution of a hotel of similar standard at the same resort. But where an organiser sells a holiday centred around an attraction which becomes unavailable, such as a holiday to Disneyworld, if the park is not open, it is thought that this is likely to constitute an alteration which is significant.
In such a case the organiser may only make the alteration where it is constrained to do so by circumstances beyond its control. The meaning of ‘constrained’ was considered by English courts in two authorities, albeit under the earlier (very similarly worded) 1992 Regulations, in the context of the SARS epidemic of Spring 2003. In Lambert v Travelsphere Limited  CLY 1977 the appellate court held, albeit obiter, that although a tour operator cannot shut its eyes to an obvious danger so as to deny that it is constrained to alter an essential term, it is permissible for it not to alter the term until there is not a ‘flicker of hope’ that the contract can be performed in accordance with the original term. In order for a tour operator to be constrained to alter a term, it must be absolutely inevitable and unavoidable for it to be altered. The decision was followed in Clark v Travelsphere Limited, Leeds County Court, 22nd October 2014, in which the ‘flicker of hope’ test was applied in favour of the tour operator.
‘Flicker of hope’
In the context of COVID-19, the now generally accepted ‘flicker of hope’ test will be most relevant in situations where it appears uncertain whether a holiday (or one of its main characteristics) will be able to go ahead. For example a holiday due to begin in a few weeks’ time may be imperilled by the FCO issuing new advice against travel to that destination due a sharp increase in its infection rates, or the destination country itself closing its borders to tourists. Similarly the businesses in that country which are required to facilitate one of the ‘main characteristics of the travel services’, for example adventure sports businesses on a package holiday sold specifically for that particular sport, may still be shut despite the country being open for travel. At first blush it would seem in this situation, where a holiday is a matter of weeks away, that the tour operator would be ‘constrained’ to cancel and provide the consumer with his or her choice of remedy as per the Regulations. However, deploying the flicker of hope test the tour operator could refuse to cancel until the very last moment, arguing that because the coronavirus situation (encompassing infection rates, bilateral travel agreements, countries opening and closing to tourists, business opening and closing, FCO advice, and so on and so forth) changes so rapidly that it is not ‘absolutely inevitable and unavoidable’ that the holiday will not be possible until the final hour. For a holiday in a few weeks’ time, it is conceivable that the situation could change before then, and as such it not inevitable that the holiday will need to be cancelled.
If the courts do indeed follow the ‘flicker of hope’ authorities in the context of COVID-19, therefore, any such policy on the part of tour operators – waiting until the last minute – will probably not put them in breach of the holiday contract. As much as one sympathises with the consumer in this situation, left on tenterhooks and probably having taken annual leave which gets more difficult to reclaim by the day, one must also appreciate that the operators are trying their level best to stay solvent. It could be said that consumers, particularly those who booked holidays while aware of the precariousness of international travel as a result of COVID, should be more flexible and accepting of operators’ difficulties. Conversely a consumer may resent operators weaponising the Regulations, which were designed to protect consumers, against them; where a consumer cancels a holiday unilaterally before the flicker of hope has died, even where the tour operator is subsequently constrained to cancel the holiday, the consumer is not entitled to a refund or to compensation.
With all that in mind, it may be that the courts will take a different approach and retire the ‘flicker of hope’ test, but this would require appellate court intervention; whichever way this issue is decided, it is to be hoped that it will be resolved speedily. Perhaps a leapfrog appeal would assist, but with the courts currently facing a backlog of unprecedented proportions, it is inconceivable that any clarity on this issue will be provided prior to the 2021 season.
In relation to holidays entirely cancelled due to the pandemic, Regulation 14 will be engaged and the organiser may terminate the holiday contract at any stage, as long as a full refund is provided to the consumer. In the authors’ opinion a second spike would clearly constitute unavoidable and extraordinary circumstances, unless of course the risk of such a spike were known at the time of booking, in which case a consumer-friendly court might well determine that where an organiser offers a holiday for sale at a destination which it knows full well is at significant risk of such an eventuality, it should bear the risk of it occurring.
Organisers currently taking bookings for 2020 should be aware that notwithstanding any issues there may be in respect of travel insurance, pursuant to Regulation 15 it will be liable to the consumer for the performance of the holiday contract, irrespective of whether the travel services in question are to be performed by a third party supplier. Where, for example, a destination country suddenly locks down by closing hotels, the organiser owes a duty to the traveller to accommodate him or her in accommodation of equivalent standard, which may not be a straightforward matter. Where it is simply not possible to make any such arrangements, a price reduction, or compensation, or both, is payable. The organiser must also repatriate the traveller without delay and at no additional cost to the traveller, but if it cannot do so as a result of unavoidable and extraordinary circumstances, it must bear the cost of accommodation, at equivalent standard if possible, for no more than three nights.
Unwell on holiday
Lastly, where a traveller encounters difficulty whilst abroad, for example he or she falls ill or finds him or herself quarantined under local measures, pursuant to Regulation 18 the organiser owes a duty to provide assistance without undue delay. This will include the provision of information regarding health services and local authorities, and, in this context, details regarding the local provisions relating to quarantine, social distancing, wearing of masks and so forth. The duty on the organiser is unqualified, so that even if the traveller requires assistance through his or her own actions, such as criminality, the organiser must assist, albeit in those circumstances it may charge a reasonable fee.
What does the future hold?
Not for the first time, in considering the provisions of the Regulations the authors have had cause to reflect on the fact that they were never intended to apply in these conditions. Tour operators hard hit by an unprecedented global pandemic now run the gamut of a second spike; no one can predict whether, or when, further lockdown measures might be taken globally, yet organisers struggling to refund travellers for Spring and early Summer holidays must now take the risk that they will be required to make a similar round of refunds in the Autumn, not to mention the possibility that they will be called upon to provide assistance locally in the event of a sudden lockdown.
Some destination countries, such as Cyprus, are seeking to attract holidaymakers by offering to provide accommodation and subsistence in the event of an outbreak, as well as designated quarantine hotels for those tourists testing positive for COVID-19; it may be that in order to restore consumer confidence other countries dependent on the industry will follow suit. One thing is for sure; the Summer season will be an interesting one.
About the authors
Called to the Bar in 1997, Sarah Prager has been listed in the legal directories as a Band 1 practitioner in travel law for many years. Together with her colleagues at 1 Chancery Lane, Matthew Chapman QC and Jack Harding, she co-writes the leading legal textbook in the area, and has been involved in most of the leading cases in the field in the last decade.
Richard Collier was called to the Bar in 2016. Before that, he had worked as a Judicial Assistant to Lord Justice Jackson in the Court of Appeal. In the short time he has been practising he has accumulated a wealth of experience in personal injury claims generally, with a particular emphasis on cross border and other travel related disputes.
Matthew Ford has led BLM’s travel team, which consists of over 30 lawyers across 6 offices, since 2006.