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Package Travel Regulations

How do the Package Travel Regulations protect against travel company insolvency?

The Package Travel Regulations act as a safety net for travellers by providing crucial protection in cases of travel company insolvency. These regulations, originally established under the EU framework but retained in the UK post-Brexit, aim to safeguard consumers against financial loss and ensure that holiday-goers are not left stranded if their travel company goes bankrupt.

At the heart of the Package Travel Regulations is the concept of a "package" holiday. This typically means a combination of at least two different types of travel services (such as flights, accommodation, car rental, or other tourist services) which are booked through a single contract with a tour operator or retailer. The regulations also cover ‘linked travel arrangements’ where separate contracts are booked with different providers but facilitated within a single booking framework.

One of the primary ways these regulations protect consumers is through the requirement for financial protection. Travel companies offering package holidays must provide evidence of financial security to reimburse customers or repatriate them in case of insolvency. This can be achieved through various means, including bonding through an approved financial institution, insurance policies, or participating in a protection scheme such as ATOL (Air Travel Organisers’ Licensing).

ATOL, managed by the Civil Aviation Authority, is a particularly well-known form of protection for UK holidaymakers. It is a government-backed scheme that covers flight-based holidays and some flight-only bookings. Should an ATOL-protected company fail, the scheme ensures that customers receive a full refund or are brought back home if they are already abroad.

For travel packages not involving flights, tour operators might use other bonding measures or insurance to comply with the regulations. The key requirement is that consumers should never be left out of pocket or lacking assistance purely due to the insolvency of the company from which they purchased their travel package.

In practical terms, if a travel company were to go bankrupt prior to a traveller’s departure, the Package Travel Regulations ensure the consumer receives a full refund. If insolvency occurs while the traveller is partway through their trip, there is provision for continuing the holiday, arranging alternative accommodation and travel, or bringing the traveller back to the UK.

In addition to financial protection, the Package Travel Regulations grant consumers rights related to the transfer of bookings, the provision of clear and complete information, and the correction of issues if the holiday does not meet the expectations set out in the contract.

The regulations have been designed not only to protect consumer rights but also to instil confidence in the travel market, encouraging people to book holidays without fear of financial repercussion in the event of a travel agency or airline collapse. Therefore, for UK travellers booking package holidays or linked travel arrangements, the Package Travel Regulations offer comprehensive protection against the risks posed by travel company insolvency.

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