Big four tour operators all now on board

PN 67/02     21 October 2002

Thomas Cook Tour Operations Ltd has agreed to change its contract terms to give travellers a fairer deal, following action by the OFT.

In addition, the Association of British Travel Agents (ABTA) has agreed to revise the model contract it recommends to members, with new terms introduced this month.

The changes made by Thomas Cook (whose holidays include the JMC brand) and ABTA cover issues such as surcharging, cancellation rights and compensation.

Thomas Cook will make the changes in the next reprint of its brochures and has agreed not to enforce the disputed terms in existing contracts. This brings it into line with MyTravel Group plc (trading as Airtours Holidays), TUI (UK) Ltd (trading as Thomson Holidays) and First Choice Holidays plc who have already agreed to similar changes in their standard contract terms.

John Vickers, Director General of Fair Trading, said:

'The big four tour operators have now all agreed to fairer terms which is good news for holidaymakers.

'I also welcome ABTA's move. It gives guidance that will help many smaller tour operators still using unfair terms and should speed our continuing negotiations with these companies. There should now be swift take-up of fair terms to benefit holidaymakers across the whole market.'

Details of the contract terms which ABTA and Thomas Cook have agreed to change following intervention from the OFT under the 1999 Unfair Terms in Consumer Contracts Regulations (see note 2) are set out in the annexe below.

ANNEXE

The OFT had concerns about ABTA recommending terms that:

• allowed the imposition of a surcharge if members' costs rose, but denied a reduction if they fell. The Package Travel, Package Holidays and Package Tours Regulations (PTRs) 1992 give consumers this right. Change – the term allowing surcharges will also allow for reductions
• did not provide the consumer with options to which they are entitled under the PTRs if a price increase amounts to a significant change to the booking (stated in the contract as more than a 10 percent increase) i.e. a replacement holiday of equivalent/superior quality if available, a holiday of lesser quality if available with the difference refunded or a full refund. Change – PTR options provided
• refused to refund insurance premiums when the consumer cancelled following a significant surcharge (conflicts with the PTRs). Change – term allows for refund of insurance premium if consumer can show they are unable to transfer or re-use the policy
• failed to make clear the options available under the PTRs when the original holiday is cancelled through no fault of the consumer. Change – options set out more clearly
• excluded payment of compensation for significant changes made to a holiday by the tour operator above a set scale, even if the consumer could prove a greater loss. This conflicts with the PTRs. Change – the contract will now allow for greater compensation than provided for in the scale if the consumer can show greater loss
• stated that the contract is governed exclusively by English law and granted exclusive jurisdiction to the English courts which is potentially unfair to consumers in Scotland and Northern Ireland. Change – amended to provide that if consumers live in Scotland or Northern Ireland the Courts of Scotland or Northern Ireland can deal with disputes
• recommended that a 21-day notice period would be a reasonable requirement for a consumer to request a name change under Reg 10 of the PTRs. Change – term now refers to what is reasonable in individual circumstances.

The OFT had concerns about Thomas Cook terms that:

• allowed the imposition of a surcharge if certain costs rose, without entitling the consumer to a reduction if the same costs fell and failed to specify that the PTRs require that no increase would be made in the 30 days before departure. Change – surcharge term deleted
• failed to provide the consumer with the options as required by the PTRs of taking a replacement holiday of equivalent/superior quality if available, a holiday of lesser quality if available with the difference refunded or a full refund where the consumer cancels as a result of a price increase which amounts to a significant change (stated in the contract as more than a 10 percent increase). Change – options no longer needed as surcharge term now removed (see bullet point above)
• excluded an insurance premium refund where a consumer cancels as a result of a significant change including an increase of more than 10 percent of the price, contrary to the PTRs. Change – terms allow for refund of insurance premiums if consumer can show they are unable to transfer or re-use the policy
• required the consumer to pay the difference in price if taking a more expensive substitute holiday when the original holiday was cancelled through no fault of the consumer or when Thomas Cook significantly altered the holiday. This conflicts with the PTRs. Change – requirement to pay difference removed
• stated that a name change affecting everyone on the booking will be treated as a cancellation and incur cancellation charges. This conflicts with the right under the PTRs to transfer a booking in certain circumstances. Change – term replaced by term allowing name changes
• excluded payment of compensation for significant changes made to a holiday by the tour operator above a set scale, even if the consumer could prove a greater loss. In addition the contract excluded compensation entirely for changes made more than 56 days before departure. Both conflict with the PTRs. Change – the contract will now allow for greater compensation than provided for in the scale if the consumer can show greater loss
• denied liability for complaints received more than 28 days after the holiday ended. Change – exclusion removed
• denied liability for flight delays (contrary to PTRs requirement to be responsible for third party suppliers). Change – exclusion removed
• stated that the contract is governed exclusively by English law and granted exclusive jurisdiction to the English courts which is potentially unfair to consumers in Scotland and Northern Ireland. Change – amended to provide that if consumers live in Scotland or Northern Ireland the Courts of Scotland or Northern Ireland can deal with disputes.

NOTES

1. The OFT announced on 2 October 2002 that MyTravel Group plc (trading as Airtours Holidays), TUI (UK) Ltd (trading as Thomson Holidays) and First Choice Holidays plc had agreed to changes in their standard contract terms. See OFT press release 64/02 for further details.

2. The Unfair Terms in Consumer Contracts Regulations (UTCCRs) came into force on 1 October 1999 and replaced the 1994 Regulations. The regulations implement an EC Directive (EC Directive 93/13) in the UK. UTCCRs apply to standard contract terms used with consumers in contracts made after 1 July 1995. The Regulations say that a consumer is not bound by a standard term in a contract with a seller or supplier if that term is unfair. They also give the OFT and other Qualifying Bodies powers to stop the use of unfair standard terms, if necessary by obtaining a court injunction. Ultimately only a court can decide whether a term is unfair.