Coronavirus and the travel industry: a fight for survival
The travel industry is a resilient industry. It has to be – it feels the impact of most world events, from terrorism and outbreaks of war through to extreme weather and now, a global coronavirus epidemic.
Travel is also a very heavily regulated industry – which does provide customers with certain protections in these situations but also places a heavy legal and resulting financial burden on travel companies in what are already challenging times.
The scale of the coronavirus outbreak is unprecedented and the impact and worldwide response unlike something many of us have seen before. However, the industry has weathered many events previously which resulted in a significant (but ultimately temporary) decline in bookings – such as 9/11, the recession in 2008 and of course Brexit. The travel industry will survive the coronavirus outbreak and ultimately come out stronger (and with a huge increase in bookings when normal service resumes and everyone can’t wait to travel again!) but there’s some painful times to go through first.
Farina Azam, a partner in our commercial technology team, leads our travel practice and answers some of the most common questions she’s getting from her travel clients.
Dealing with customer cancellations
Many travel companies are facing an increasing number of cancellation requests from customers. So, what is the legal position – do travel companies have to allow customers to cancel for free if they no longer wish to travel due to the coronavirus outbreak? The legal position depends on the travel advice given by the Foreign and Commonwealth Office (FCO) in relation to a particular destination, and also the type of holiday which has been booked.
Where the FCO advises against travel to a particular destination
If the FCO advises against travel (or against all but essential travel) to a destination, this is considered “unavoidable and extraordinary circumstances” which affect the performance of the package and/or transport to the destination. Under the Package Travel and Linked Travel Arrangements Regulations 2018 (PTRs), customers have the right to cancel their package holiday and receive a full a refund of their holiday amount in this situation, if they are due to travel imminently.
Where the FCO does not advise against travel to a destination
If the FCO advice for a destination allows for travel without restrictions, then there is no automatic right to free cancellation under the PTRs. If customers no longer wish to travel due to coronavirus concerns, package organisers can impose their standard cancellation charges on customers. Some travel companies are currently offering relaxed amendment and cancellation charges to offer some reassurance to customers and encourage bookings but this is a commercial decision, not a legal obligation.
What about if the destination changes its entry requirements?
If the destination changes their entry requirements to no longer accept customers from certain countries
or customers who have travelled to certain destinations within the last 14 days (such as Italy) – this may mean that affected customers are no longer able to enter the destination. If the restrictions include a time-limit, then customers should be advised to defer their departure date until the end of the restricted period at which point they’ll meet the entry requirements. If customers wish to cancel their trip, they should be advised to make a claim on their travel insurance as the package organiser does not have a legal obligation to refund them in this situation.
What happens if a customer can no longer travel as they’ve been placed in quarantine?
Again, package organisers do not have a legal obligation to refund customers in this situation, as package organisers/airlines are still able to provide the customer’s holiday. Customers should be directed to make a claim on their travel insurance.
Find all our Covi-19 related advice here.
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