§ 12.1 pm
§ Mr. Michael Stern (Bristol, North-West)To say that this summer the package holiday industry has been going through a bad time would be a major understatement. Having enjoyed for some years a slowly rising market, having built up its brochures each year in the expectation that that rising market will continue, and having encouraged the practice of last-minute bookings by offering substantial discounts, the tour operators were faced with not just an estimated 15 per cent. reduction in the expected market, but a substantial shift away from Spain as the preferred holiday destination. What has been regrettable about that pattern and what has occasioned me to raise the subject for debate is the fact that it is the customer who has suffered.
This season has highlighted three practices that exist within the tour operator section of the industry, all of which operate to the detriment of the holidaymaker. The first is the power of the tour operator to make material alterations to a holiday which has been booked and paid for, and to make those alterations up to the last moment before departure without infringing the regulatory code of the industry's governing body — the Association of British Travel Agents Limited. A holidaymaker may discover at the last minute that he or she is going to a different hotel, a different destination, a different resort or, in extreme cases, a different country. The only rights that the customer has are a woolly claim to compensation or the right to cancel the holiday and receive a refund, although with no holiday in prospect.
The second practice is known as consolidation. It enables tour operators to cancel flights, often with virtually no notice, to fill up other flights which have vacant seats. The holidaymaker is thus subjected to many extra hours of travelling and delay and a great deal of what can moderately be described as inconvenience at a time when the holidaymaker is paying for the reverse. Again, there is only a woolly right to compensation if the tour operator chooses to pay it, with the right to cancel and have no holiday.
The most pernicious practice occurs where a tour operator anxious to expand his share of the market puts out brochures containing flights and destinations which he must know he has no hope of fulfilling, thereby hooking the customer who can then be consolidated later onto another flight or another resort. That practice, which is known as ghosting, is known to be widespread and many people have suffered from it.
In all those cases, ABTA is powerless to prevent the abuses to which I have referred. Unless it rapidly sets its house in order, the industry will be defenceless against the major changes proposed in the EEC draft directive that we are discussing.
Since I first showed through the media my interest in this subject, I have had what can only be described as a fairly substantial postbag. To illustrate the need for rapid action, I should like to quote a few of the many cases that have been brought to my attention from all over the country.
Mr. Guthrie of Strathclyde booked a return flight from Malaga to Glasgow. He was informed at Malaga airport one hour before the flight was due to leave that it had been 1452 cancelled. He was left at the airport for 12 hours and the following morning was flown to Birmingham, which necessitated a further nine-hour journey to Glasgow.
Mrs. Purchase from Taunton booked last November to fly from Bristol to Austria on 2 June. She paid the final account on 3 April and was then informed that she would have to fly from Luton on 30 May to a different and less attractive destination.
Mr. Whiting of Leicester booked seven days in Corfu with Sunmed holidays and was told the Monday before departure that the resort had been changed. He was offered a substitute resort which was changed the following clay. He eventually ended up at inferior apartments which were already occupied.
Mr. Stevens of Wokingham booked to go to Minorca in January. He was forced by consolidation to cancel in April. He booked with Horizon and made the final payment in June. He was again forced to cancel because of consolidation and is now due to travel to Majorca with Thomson Holidays. He has his fingers crossed.
Finally, from my constituency, Mr. Penny and Miss Bartlett, who are getting married on 7 September, booked in March with Thomson Holidays to go to Benidorm from Gatwick during the early afternoon of Sunday 8 September. In June, they were offered a flight change to 7.30 am on the Sunday morning. That would have meant them leaving Bristol at 2 am on their wedding night. They were eventually offered an evening flight on the Sunday to Torremolinos from Bristol at 10.15 pm. for which it was suggested that they should be charged about £100 more.
In the light of those and many other incidents of which I have been informed, many of which were predictable and predicted at the beginning of this year, ABTA should surely by now have announced steps not just to prevent further such problems this summer, but to reorganise its members for the future, yet I understand from Mr. Kenneth Scott, the chief executive officer of Ilkeston Consumer Co-operative Society Limited, who has done considerable research into this problem, that while it is generally accepted that next winter's holiday market might increase by about 10 per cent., Thomson Ski has increased its advertised programme by 33 per cent. and Horizon by 20 per cent.
The problem is not peculiar to this country because, according to a survey by the EEC Commission, out of the 25 million holidaymakers in Europe this summer, approximately 6 million—24 per cent. —will face some disappointment.
If this summer's chaos had been wholly unexpected, and if the need to tighten the package holiday industry's rules to protect the consumer had been sprung on the industry at the last minute, ABTA's inaction in doing no more than enforce its existing code could have been understood. However, the appalling position of bookings for this summer was known in January and many companies faced with the eventual need to consolidate their flights did such consolidations in the early months of the year, and so enabled their customers to have adequate time to rearrange their holidays.
In addition, it was known towards the end of last year that the holiday places available and being offered by ABTA members for this summer exceeded the maximum possible market by anything between 25 and 33 per cent. The proposed EEC directive further to regulate the industry for the benefit of the holidaymaker has been 1453 around since at least January this year, but it has never once, to the best of my knowledge, been opened by ABTA for public discussion.
In those circumstances, it is not surprising that the EEC Commission has felt the need to step in and propose a draft directive to improve the regulations of an industry which has, by this summer's experience and this winter's prospective experience, showed itself at least insensitive to the desires of its customers.
The proposals in the draft directive are, in many respects, draconian. As a result, while my hon. Friend the Minister may feel, with considerable justification, that the directive as a whole is inappropriate, I hope that he will still look at some of the provisions contained in it with a view to encouraging the industry to adopt them on a voluntary basis.
For example, article 6(2)(m) of the draft directive calls for the automatic disclosure to the customer of the name and address of the local representative of the tour organiser. Such information would be, and would have been, very welcome to many holidaymakers. It is not a requirement of the present ABTA code.
Article 10(1)(c) provides that the holidaymaker is entitled to cancel and obtain a refund if the holiday is modified significantly—a provision that already exists under the ABTA code—but says that the definition of a significant modification is to be resolved by reference, in part, to the holidaymaker's view of what is significant. So the holidaymaker should have a say in whether or not he is entitled to be protected under the ABTA code—and on that the code is silent.
Article 10(4) provides that, on cancellation of a holiday, the holidaymaker should also be entitled to damages for the loss of his holiday, whereas under the present code he is entitled merely to a refund. Article 5 provides that a deposit on a package holiday should not be more than 10 per cent. of the whole price, again a matter on which the ABTA code is silent.
It cannot be said that there is no precedent in Europe for the package holiday industry to be subject to statutory regulation where all else fails. Draft legislation currently going through the Netherlands Parliament proposes entitlement to damages similar to that contained in the draft EEC directive—something that is already believed to exist in the United States. In addition, the draft Netherlands legislation suggests that all contracts between travel agents and tour operators should be open to public inspection in certain circumstances — a proposal that would flutter a few dovecotes in the travel industry. I understand that the Bill has reached the equivalent of Report stage in the Netherlands Parliament, and is therefore close to the statute book.
Apart from the proposals in the directive or in the proposed new Netherlands law, there are other ways in which the holidaymaker could receive greater protection. I cannot see any reason why, if a customer is obliged to pay the full price for a holiday eight weeks before departure, he should not then be guaranteed that he will get the holiday for which he is paying. Indeed, it would take a great deal of heat out of the issue if ABTA were to announce—and I invite it to do so—that no further consolidations would be put into effect by its members unless they are advertised to their customers within the next seven days.
1454 I appreciate that in that area ABTA has considerable difficulty in self-regulation because it is a body containing, almost in equal measure, two entirely different interests —the travel agents who genuinely want their customers protected and want to retain their customers' goodwill, and the tour operators who want to preserve the maximum freedom of action. Nevertheless, ABTA should be aware that, if it does not set its house in order, more stringent provisions of the sort that I have been discussing will become inevitable.
In view of the publicity that the media have rightly given to the issue already this summer, and in view of the size of my postbag, it is worth putting it on record that this summer many tour operators have adopted an entirely reasonable and responsible attitude to their customers. They have not stuffed their brochures with holidays that they could not possibly sell in sufficient quantities. They have taken adequate care and availed themselves of adequate local knowledge to prevent many overbookings at resorts. Where consolidations or material alterations in holidays have been necessary, they have given their customers ample time to reconsider.
The horrors that I have been describing, the horrors that we have heard of in the media, are not the fault of the whole of the industry, but unfortunately many companies within the industry have not taken the attitude that I have just described. I hope that my hon. Friend the Minister will impress upon the industry that it is the actions of the latter companies — some of which I have mentioned — that have created the need for EEC legislation to be considered, at least. Similar actions in the Netherlands have created a similar need there. Such actions will continue to feed the need unless the industry puts its house in order and thereby renders an EEC directive unnecessary.
§ The Minister for Information Technology (Mr. Geoffrey Pattie)I thank my hon. Friend the Member for Bristol, North-West (Mr. Stern) for bringing the subject of consolidation to the attention of the House. I can well understand the disappointment experienced by travellers who find themselves consolidated at the very last minute. My hon. Friend cited some interesting and sad case histories from his postbag.
My hon. Friend's recommendations are good. I know that the travel industry will be grateful for his constructive approach in the debate, and especially for his remarks complimenting the vast proportion of operators on their responsible approach to the problem. However, if the practices that my hon. Friend described continue, the Government will find it difficult to resist any action proposed by the European Commission. I must point out that no proposals for a directive on package holidays have yet been made to the Council of Ministers by the Commission. However, I believe that the Commission does intend to make a proposal for a directive on package holidays later this year. Until the Government see this proposal, the House will understand that it is difficult for me and the Government to comment on it.
However, the Commission has held meetings of both national experts and the Consumer Consultative Committee to discuss possible draft articles, which might form a draft directive broadly aimed at harmonising that legislation within the Community which affords consumer protection to people taking package holidays. It is to these preliminary draft articles that my hon. Friend referred.
1455 Despite the fact that most member states in the Community do not see the need for such a draft directive, either from a consumer protection view point or as an instrument to stimulate tourism between member states, the Commission still intends, I believe, to submit a revised proposal to the Council of Ministers. Although we have not seen any revised proposal from the Commission, I understand that the current draft would have wide implications for United Kingdom law and practice on package holidays.
European Community legislation has all too frequently been thought by some to be the answer to consumer problems in many areas. I am not convinced that this is the case. The Government firmly believe that the interests of consumers, whether on a package holiday or not, are not served by increasingly rigid legislative controls on the providers of goods and services. Most problems, including any associated with package holidays, are better dealt with at a national level and often the answer lies not in legislation but in effective voluntary, self-regulatory action by the trade involved. Package holidays are a good example of where a voluntary code of practice can and should achieve a high level of consumer protection.
My hon. Friend was accurate, as he invariably is, in reminding the House of the potential conflicts of interest within ABTA. Nevertheless, the ABTA codes of practice, which were drawn up in consultation with the Office of Fair Trading, prescribe rules to be observed by its members, both tour operators and travel agents, in those areas such as descriptions of holidays, booking conditions, alterations, cancellations and price variations, to which my hon. Friend referred in particular. These codes are binding on all ABTA members, who may be fined or expelled for non-compliance. My hon. Friend will no doubt be aware that ABTA members account for the vast majority of package holidays from the United Kingdom.
Provision is also made in the codes of arbitration and conciliation procedures in the event of a dispute between a member and a customer. Although over 7 million package tours were taken last year, ABTA reported that, of the 9,683 complaints dealt with by its conciliation department, only 418 went as far as arbitration. This level of complaints is far lower than that found by the EC Commission in its survey. I might add that many member states disagreed with the findings of the EC survey. The Office of Fair Trading periodically monitors the codes and I understand that the office is currently in the process of doing this.
These codes, coupled with the protection afforded to package holidaymakers by bonding and insurance schemes, mean that the protection offered or available in the travel trade is greater than that in many other sectors.
Consolidations, the practice whereby tour operators, through lack of demand for a particular package tour, may have to transfer travellers to another flight, perhaps from a different airport, have, as my hon. Friend said, been the subject of considerable comment recently. My hon. Friend the Under-Secretary of State responsible for corporate and consumer affairs, when answering a question yesterday on this subject from the hon. Member for Normanton (Mr. O'Brien), explained that the Office of Fair Trading will include the question of the consolidations of holiday 1456 arrangements in its monitoring of all aspects of ABTA's code of practice. The office has expressed its concern to ABTA about the reported volume of consolidations this year and has asked the association to inform the office of what action it intends to take to deal with this problem. I am confident that we can look to ABTA to continue to enforce its members' adherence to their codes of practice. Already, I am aware that members of ABTA have been fined for breaches of the code.
Some people have argued for legislation to prohibit consolidation, but that is not the answer. The travel trade already has the means to regulate its own behaviour, so that the service it provides is acceptable to its customers. An overall ban on consolidation would no doubt lead to an unacceptable increase in the prices of package tours, so placing them beyond the reach of many people.
Apart from the ABTA codes of practice, the consumer also has the protection of the law. Although in the United Kingdom there are no laws which specifically and exclusively govern rights and duties between consumers and the providers of package holidays in particular, the basic legal position is primarily governed by the ordinary, general law of contract and, in some circumstances, by the law of tort. In both cases the law is based on common law and equitable principles developed over a long period by judicial decisions and modified from time to time by statutory provisions. In both cases, it is open to a parry who has suffered loss or damage through breach of contract or other act or omission to seek redress, usually in the form of financial compensation, in the civil courts, although some statutes impose criminal penalties on the wrongdoer.
One of the most important statutory provisions is the Supply of Goods and Services Act 1982. This Act, in England and Wales, specifies implied terms embodying the respective rights of providers of goods and services and consumers, extending many long-standing provisions relating to the sale of goods to the provision of services. Providers of services, who include tour operators and travel agents, have an obligation to do so with reasonable care and skill, within a reasonable time and for a reasonable charge. Redress for aggrieved consumers is by civil proceedings for damages.
Perhaps I may return to the draft European Commission proposals. When the Commission puts its final proposals for a directive on package holidays to the Council, the document will be available to all member states. When these proposals are received, the Government will of course provide a copy to the House together with an explanatory memorandum. My hon. Friend gave a detailed analysis of the various proposed clauses he has studied, centring in particular on entitlement to damages. It was helpful to hear his comments about the proposed Netherlands law.
The Government will also consult all other interested parties, including representatives of both holidaymakers and the travel trade, about the implications of the proposal. Meanwhile, both the Government and the Office of Fair Trading will continue to look to ABTA effectively to control any practices by its menbers which are detrimemtal to the holidaymaker.